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Please answer correct please asap please Don't answer by pen paper plz QUESTION 3 Consider an investor based in the DC that invests in the
Please answer correct please asap please
Don't answer by pen paper plz
QUESTION 3 Consider an investor based in the DC that invests in the FC. To hedge the FX risk the DC investor could (select all that are true): Purchase a futrues contract FC to DC for the return trip Exercise a futures contract DC to FC at the date of the investment return trip Engage in a forward DC to FC, if counter-party risk is negligible Write a call option FC to DC at today's spot FX rate Purchase a put option DC to FC at today's spot FX Engage in a swap for FC at the investment's open date to DC at the invesment's close date (4) QUESTION 4 Match the risk with the correct transaction (if any): * The DC appreciates, altering relative prices in the current account A. Risk to the foreign investor invested domestically * The DC depreciates, altering relative prices in the current account B. Risk to the investor invested abroad The DC depreciates, altering relative prices in the financial account C. Risk from translation to the FC firm with DC operations The DC appreciates, altering relative prices in the financial account D. Risk form translation to the DC firm with FC operations E. Risk to the buyer of inputs from FC firms # The DC appreciates, altering the spot FX rate (not future return trip) F. Risk to the seller of goods to the FC buyers QUESTION 5 Consider a firm in the DC that uses inputs from a supplier in the FC. To hedge the FX risk the DC firm could (select all that are true): (3) Purchase a call option for FC to DC, which the firm will exercise if the future spot FX rate (FC/DC) at the time (future) is higher than the contract rate (strike price). Purchase a futures contract for FC to DC that you could sell for a profit if the DC weakens, which increases your costs of importing the input Purchase a call option for DC to FC, which the firm will exercise if the future spot FX rate (FC/DC) at the time (future) is lower than the contract rate (strike). Exercise a futures contract for DC to FC if the strike price of the contract is higher than the spot market rate at the exercise date. Engage in a forward contract for DC to FC at today's spot rate, given that counter-party risk is manageable. Purchase a futures contract for DC to FC at a strike price below your tolerance for losses on the hedged transactionStep by Step Solution
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