Question
Question 2 A company based in the US has bought components from Japan for 200 million, payable in four months' time.The following data is available:
Question 2
A company based in the US has bought components from Japan for 200 million, payable in four months' time.The following data is available:
BidAsk
USD/JPY spot rate:94.000094.0040
USD/JPY 4 month forward rate:86.100089.7000
Euroyen borrowing interest rate:0.4% per annum
Euroyen investment interest rate:0.1% per annum
Strike price for a USD/JPY call option:92.0000
Premium for this call option:2.0%
The company's cost of capital12% per annum
Required
Evaluate the company's hedging options.
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The American Economy
Authors: Walter Greason, William Gorman
1st Edition
1524902675, 9781524902674
