please answer all
You are a U.S. exporter of soybeans and have just received an order from the U.K. You will deliver soybeans today to the buyer in the U.K. and recelve a payment of 200,600 in one year, You are concerned about the dollar proceeds you will recelve from this foreign sale in one year. Suppose: - Forward exchange rate is $1.40 per pound - Spot exchange rate is $1.35 per pound - U.S. interest rate is 3.00% - U.K. interest rate is 5.00% Call option with strike price of $1.42 per pound is avaliable with premium of $0.14 per pound. Put option with strike price of $1.42 per pound is avallable with premium of $0.10 per pound. Required: a-1. Unhedged Position: Suppose you decide not to do amything. In one year, the spot rate happens to be $1.45 per pound. What will be the total dollar proceeds from this sale then? a-2. What will be the total dollar proceeds if the spot rate happens to be $1.30 per pound in one year? a.3. What will be the total dollar proceeds if the spot rate happens to be $1.32 per pound in one year? a-4. Are you subject to exchange rate risk if you remain unhedged? b-1. Forward market hedge: How can you guarantee an exact amount of dollar proceeds from this sale using forward contracts? Should you agree to buy or sell ,200,600 forward in one year? b-2. What will be the total dollar proceeds from this sale with forward hedge? b-3. Are you subject to exchange rate risk in this case? c-1. Money market hedge: How can you ensure guaranteed dollar proceeds from this sale using money market hedge? c-2. What will be the total dollar proceeds? c-3. Are you subject to exchange rate risk when money market hedge is used? Complete this question by entering your answers in the tabs below. d-1. Option market hedge: How can you hedge using options? Should you purchase call or put options on pounds? d-2. What is the total premium due today? d-3. What will be the total dollar proceeds if you exercise your options? d-4. When will you not exercise your options and what will be the total dollar proceeds then? e-1. Comparing hedging methods: What are the break-even exchange rates between the different hedging methods? e-2. When do you prefer which hedging method? Complete this question by entering your answers in the tabs below. Option market hedge: How can you hedge using options? Should you purchase call or put options on pounds