Marge A Centar $ - % Coca FO B You are selling mopeds to China. The importer owes you Yuan 6,000,000. It is due in 90 days. If US interest rates and your cost of capital are the same as above and the exchange rates and Chinese interest rates are as follows: Data Table Amount to be received in Yuan) 6,000,000 Days 90 Spot 6.3240 Yuan/s Forward rate premium discount calculate) -3.00% Devaluation of Yuan Expected change in FX rate (calculate) -5.00% Devaluation of Yuan Identify what kind of Option should be used 10 Premium - CALL Option 3% 11 Premium-PUT Option 5% 12 CALL Strike Price 6.800 Yuan/s PUT Strike Price 6.800 Yuan 5 14 Identity which rate should be used Borrowing rate Investing rate as US borrowing AND investing rates 5% 3% 14 Chinese borrowing AND investing rates 8% 6% 13 Cost of Capital (WACC) 10% TE 19 Questions: 301. If you remain unhedged, how much will you collect in 90 days? 112. If you enter into a forward contract to sell the Yuan, how much will you pay? 3. If you create a money riarket hedge, how much will you collect? 234. If you were to exercise the option, how much will you pay and when will you exercise the option? 24 Mopeds Ready esc FA # % $ 4 & 7 1 2 3 5 6 & Q W E R T Y El Vient Format Tools Data Window Hele 10:00 PM D Page La Terms View Tell me Artistes eate AA 1 1 Unhedged position a Calculate the expected rate b) Trans AR 10 US dollars you will receive at Expected FX using ngec decat of You 2. Calculate proceeds from a forward hedge ) Calculate forward Dj Translate to US dolar-theant you will neve S. Calculate proceeds from a money market hedge a) Find the amount you need to borrow today in Yuan D) Translate the amount from a US current Spot c) Adjust amount in USD (Tromb) for time value of money Carry the amount days forward V WAON Ya 4. Option Hedge D) What ophon should you buy Putor Call Don Se price The amoutcolved in USD at the strain d) Calculate costoremmin USO b) Adjust for time value of money Daculate for amount that you will receive in USD you exercise the option carry the amount to do day forwardinal Sing WACO M . Ho 79 41 : ! 1 $ 4 7 0 9 6 8 - 5 2 3 O U Q W E R Y T J K L G H S D F C B V N B NM 1 * Commer