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Lufthansa - A / P Lufthansa ( German airliner ) bought an aircraft, 7 8 7 Dreamliner, from Boeing, a U . S . company,
LufthansaAP
Lufthansa German airliner bought an aircraft, Dreamliner, from Boeing, a US company, and agreed to pay $ million payable in six months. Lufthansa is concerned with the euro payment of international purchases and would like to control exchange risk. The current spot exchange rate is $ and the sixmonth forward exchange rate is $ at the moment. Airbus can buy a sixmonth put option on US dollars with a strike price of for a premium of per US dollar. In addition, Airbus can buy a sixmonth call option on US dollars with a strike price of for a premium of per US dollar. Currently, sixmonth interest rate is per annum in the euro zone and per annum in the US
The following table shows possible Euro amount Lufthansa pays when the actual ending spot rate first row is realized depending on different alternative decisions. The question number is on the table. All the values are in euro amount at the time when $ is paid. The number in the table refers to the question number.
tableEnding spot rate $ EuroUnhedgedForwardMoney Market,,,,Options
Show all alternatives in a graph specifying axis and axis. Note that the home currency is the euro, while the foreign currency is USD for Lufthansa.
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