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please answer with the correct letter choice, thank you Space- X Corporation, located in the United States, has an accounts payable obligation of 750 million
please answer with the correct letter choice, thank you
Space- X Corporation, located in the United States, has an accounts payable obligation of 750 million payable in one year to Mitsubishi Electric of Japan. The current spot rate is 116/$ and the one year forward rate currently is 115/$. However, it is expected that the actual spot rate one year from now could be 118/$. The annual interest rate is 3 percent in Japan and 6 percent in the United States. One-year Call Options on (one Option round-lot 1,000,000 ) with a Strike/Exercise Price of \$0.0086/ are currently trading at the Philadelphia Stock Exchange (PHLX) for a premium of 0.012 cents/. The Hedge Ratio that is required for a perfect hedging strategy is: A. 0.75 B. 0.14 C. 0.50 D. 0.83 QUESTION 15 Space-X Corporation, located in the United States, has an accounts payable obligation of 750 million payable in one year to Mitsubishi Electric of Japan. The current spot rate is 116/$ and the one year forward rate currently is 115/$. However, it is expected that the actual spot rate one year from now could be 118/S. The annual interest rate is 3 percent in Japan and 6 percent in the United States. One-year Call Options on (one Option round-lot 1,000,000 ) with a Strike Exercise Price of S0.0086/ are currently trading at the Philadelphia Stock Exchange (PHL X) for a premium of 0.012 cents . How many Option round-lots are required for a perfect hedge? A. 1400 B. 1500 c. 903.50 D. 910Step by Step Solution
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