Question
Question Spot rate for EUR/USD is 1.08 and it trades at a premium of 1.5%. Calculate the EUR/USD forward rate. Question Siemens Germany exported machinery
Question
Spot rate for EUR/USD is 1.08 and it trades at a premium of 1.5%. Calculate the EUR/USD forward rate.
Question
Siemens Germany exported machinery to USA government and will be paid US$5m on 31 March 2024. The company wants to hedge this exposure as its operations is in Euro. The following information is available to you:
EUR / US$ forward rate for 31/3/2024 1.0810 / 1.0850
Euro call options strike price expiry 31/3/24 1.0750 premium 0.002
Euro put option strike price expiry 31/3/24 1.0720 premium 0.002
What is the best hedging method that Siemens should use?
What will be the Euro equivalent of this hedge?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started