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Question 2 (3 points) Velspar Corporation, a US firm, purchased a fleet of vehicles from Toyota and payment of 250 million is due in
Question 2 (3 points) Velspar Corporation, a US firm, purchased a fleet of vehicles from Toyota and payment of 250 million is due in one year. The one-year forward rate is $.0090/\. Velspar can also purchase a one-year call option on the yen at a strike price of $.0091/ for a premium of $.0001/. The one-year US interest rate is 1%. At what future spot rate will Velspar be indifferent between the option and forward hedge? $.0092/ $.0091/\ $.0089/\ There is no future spot rate at which Velspar will be indifferent between the option and forward hedge.
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