Micca Metals, Inc. Micca Metals, Inc. is a specialty materials and metals company located in Detroit, Michigan. The company specializes in specific precious metals and materials that are used in a variety of pigment applications in many industries including cosmetics, appliances, and a variety of high tinsel metal fabricating equipment. Micca just purchased a shipment of phosphates from Morocco for 6,100,000 dirhams, payable in six months. Six-month call options on 6,100,000 dirhams at an exercise price of 10.20 dirhams per dollar are available from Bank Al-Maghrub at a premium of 1.9%. Six-month put options on 6,100,000 dirhams at an exercise price of 10.20 dirhams per dollar are available at a premium of 3.1%. Using the exchange rate and interest rate data in the popup window, , compare alternate ways below that Micca might hedge its foreign exchange transaction exposure. a. How much in U.S. dollars will Micca pay in 6 months without a hedge if the expected spot rate in 6 months is assumed to be 10.20 dirhams per dollar? 10.80 dirhams per dollar? b. How much in U.S. dollars will Micca pay in 6 months with a forward market hedge? c. How much in U.S. dollars will Micca pay in 6 months with a money market hedge? d. How much in U.S. dollars will Micca pay in 6 months with an option hedge if the expected spot rate in 6 months is assumed to be less than 10.20 dirhams per dollar? e. What is your recommendation? a. How much in U.S. dollars will Micca pay in 6 months without a hedge if the expected spot rate in 6 months is assumed to be 10.20 dirhams per dollar? $ (Round to the nearest cent.) Data table Micca Metals, Inc. Micca Metals, Inc. is a specialty materials and metals company located in Detroit, Michigan. The company specializes in specific precious metals and materials that are used in a variety of pigment applications in many industries including cosmetics, appliances, and a variety of high tinsel metal fabricating equipment. Micca just purchased a shipment of phosphates from Morocco for 6,100,000 dirhams, payable in six months. Six-month call options on 6,100,000 dirhams at an exercise price of 10.20 dirhams per dollar are available from Bank Al-Maghrub at a premium of 1.9%. Six-month put options on 6,100,000 dirhams at an exercise price of 10.20 dirhams per dollar are available at a premium of 3.1%. Using the exchange rate and interest rate data in the popup window, , compare alternate ways below that Micca might hedge its foreign exchange transaction exposure. a. How much in U.S. dollars will Micca pay in 6 months without a hedge if the expected spot rate in 6 months is assumed to be 10.20 dirhams per dollar? 10.80 dirhams per dollar? b. How much in U.S. dollars will Micca pay in 6 months with a forward market hedge? c. How much in U.S. dollars will Micca pay in 6 months with a money market hedge? d. How much in U.S. dollars will Micca pay in 6 months with an option hedge if the expected spot rate in 6 months is assumed to be less than 10.20 dirhams per dollar? e. What is your recommendation? a. How much in U.S. dollars will Micca pay in 6 months without a hedge if the expected spot rate in 6 months is assumed to be 10.20 dirhams per dollar? $ (Round to the nearest cent.) Data table
