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please i nead the answer quickly Ministry of Health in Jordan has just signed a contract to purchase Corona Vaccine from UK for British Pound
please i nead the answer quickly
Ministry of Health in Jordan has just signed a contract to purchase Corona Vaccine from UK for British Pound 3,000,000. The purchase was made in December 2020 with payment due six months later in June 2021. Ministry of Health is considering several hedging olternatives to reduce the exchange rate risk arising from the sale. To help the Ministry of Health make a hedging decision you have: - The spot exchange rate is JDI.250/Pound - The six month forward rate is JDI.22/ Pound - CVT's cost of capital is 11% - UK 6-month borrowing rate is 8% (or 4.5% for 6 months) - UK 6-month lending rate is 7% (or 3.5% for 6 months) - Jordan 6-month borrowing rate is 8% (or 4% for 6 months) - Jordan 6-month lending rate is 6% (or 3% for 6 months) - June call options for Pound 750,000 ; strike price JDI.28, premium price is 1.5% - Ministry of Health forecast for 6-month spot rates is JDI.27/Pound - The budget rate, or the highest acceptable purchase price for this Corona Vaccine, is JD3,900,000 or JDi.30/Pound If Ministry of Health in Jordan chooses to hedge its transaction exposure in the forward market, it will Pound 3.000,000 forward at a rate of Step by Step Solution
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