Question
San Antonio Importers (SAI for short) is a US based firm that has negotiated a deal to buyItalian shoes from a firm in Palermo, Italy.
San Antonio Importers (SAI for short) is a US based firm that has negotiated a deal to buyItalian shoes from a firm in Palermo, Italy. The terms of the deal are as follows
Value of the deal:100millioEuros
Payment terms (note: payment is to be made in Euros)
25% down payment, with the rest split equally over 75days and 250 days.
Exchange rates: Spot (Bid, Ask): 1.35221.3600(direct quotes in the US).
75-day Forward Rates: 1.36121.3622
250-day Forward Rates: 1.37181.3731
Borrowing, Lending rates in Euros: 15.5%, 13.5% [75days], and 16.75 %, 14.25 %[250 days]
Put and Call Options are available:
CALL: Strike price: 1.3825, option premium = 12%, American, expires in 200days.
PUT: Strike price: 1.3825, option premium = 9%, American, expires in 200days.
SAIcost of capital: 10%
What is the best hedging method for SAI?
What is the best hedging method for SAI?
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Measuring And Managing Credit Risk Quantitative Approach For Default Risk Data Analysis And Models For Loss Distributions Unique Strategies For Back Capital Allocation And Saucerization
Authors: Arnaud De Servigny , Olivier Renault
1st Edition
0071417559,007178800X
