Question
Please answer the question by computer, so i can see it clearly, thank you!!! In March 2022, Russian President Vladimir Putin issued a directive requiring
Please answer the question by computer, so i can see it clearly, thank you!!!
In March 2022, Russian President Vladimir Putin issued a directive requiring "unfriendly" foreign countries (i.e., European Union countries) to begin paying for natural gas (from Russia) in rubles or face being cut off. These countries must open accounts in both foreign currency and rubles with Gazprombank, a Russian state-owned bank that has not yet been sanctioned by the US and EU since it helps the selling of Russian oil and gas.
The currency option is significant because it determines whether the buyer or the seller is responsible for the foreign exchange risk. The buyer or importer bears the exchange-rate risk under producer's currency pricing (i.e., the West in the case of gas). If the Russian currency depreciates in the medium to long term, financing imports from Russia will become more affordable for the West. If, on the other hand, the opposite trend is observed, the West risks paying more when purchasing rubles to pay for its gas imports.
Question:
Using a payback table in EUR, describe the hedged portfolio you recommended for Uniper. Should they buy or sell how many calls at what strike price? How much will this hedge cost?
Suppose you are a financial risk manager at the German energy company Uniper that has an existing long-term gas import contract with Russia. You are tasked with hedging against possible ruble appreciation that may impact a payment of 50 billion rubles (to be converted from euros) in 3 months. The current RUB/EUR spot exchange rate Eo = 0.01. Uniper would like to be fully protected against ruble appreciation such that 0.01 Ezmo s 0.0125 and also retain any upside from ruble depreciation (i.e., EzmoStep by Step Solution
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