Question
Omega Corporation, located in the United States, has an accounts receivables of 750 million in one year from a customer in Tokyo.The current spot rate
Omega Corporation, located in the United States, has an accounts receivables of 750 million in one year from a customer in Tokyo.The current spot rate is 110/$1.00 and the one year forward rate is 117/$1.00. The annual interest rate is 3 percent in Japan and 5 percent in the United States. Omega can also buy a one-year put option on yen at the strike price of $0.0086 per yen for a premium of $0.0001 per yen. The future dollar net proceeds of hedging this receivables using the forward, money market hedge, and option hedge are respectively:(Hint: Be sure to account for the option premium.). $6.410.256: $6.371.250: $6.450.000 None of the options are correct. $6,410.256: $6.950,574; $6,371,250 $6,450,000; $6,950,574; $6,528,750
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