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Microsoft Word - FINA471ProblemSet1 You have a 1 million payable due in 3 months. Show on a chart a) The dollar cost of the unhedged
Microsoft Word - FINA471ProblemSet1
You have a 1 million payable due in 3 months. Show on a chart
- a) The dollar cost of the unhedged payable as a function of the spot exchange rate 3 months from now
- b) The profit (loss) from a 3-month 1 million call option with a strike price of $1.75/ and a premium of $0.40/.
- c)Yourtotalcashflow3monthsfromnow
- d) What would be your total cash flow if you hedged with a forward contract. Assume that the forward price is also $1.75/
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Intermediate accounting
Authors: J. David Spiceland, James Sepe, Mark Nelson
7th edition
978-0077614041, 9780077446475, 77614046, 007744647X, 77647092, 978-0077647094
