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Space-X Corporation, located in the United States, has an accounts payable obligation of 750 million payable in one year to Mitsubishi Electric of Japan.
Space-X Corporation, located in the United States, has an accounts payable obligation of 750 million payable in one year to Mitsubishi Electric of Japan. The current spot rate is 116/$ and the one year forward rate currently is 115/$. However, it is expected that the actual spot rate one year from now could be 118/$. The annual interest rate is 3 percent in Japan and 6 percent in the United States. One-year Call Options on \ (one Option round-lot 1,000,000) with a Strike/Exercise Price of $0.0086/ are currently trading at the Philadelphia Stock Exchange (PHLX) for a premium of 0.012 cents/\. The Hedge Ratio that is required for a perfect hedging strategy is: A. 0.83 B. 0.50 OC.0.75 D. 0.14
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