Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Mar 30, 2024

Spot: NOK 8.0000/USD Forward: NOK 8.2000/USD 12-month USD Libor: +2.00% 12-month NOK Libor: +8.00% WACC: 10.00% Call option: strike price USD 0.125/NOK, premium USD

Spot: NOK 8.0000/USD Forward: NOK 8.2000/USD 12-month USD Libor: +2.00% 12-month NOK Libor: +8.00% WACC: 10.00% Call option: strike price USD 0.125/NOK, premium USD 0.0025/NOK Put option: strike price USD 0.125/NOK, premium USD 0.0035/NOK You will receive NOK 80M in 1 year. What will be your revenue in USD if you hedged with a FORWARD and the spot rate in 1 year is NOK 8.0000/USD? Round to the nearest dollar.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

Since we want to hedge our NOK receivables we are worried about NOK going down vis a vis USD as we want to sell NOK in the future And if the NOK goes ... blur-text-image

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

Recommended Textbook for

Market Practice In Financial Modelling

Authors: Tan Chia Chiang

1st Edition

9814366544, 978-9814366540

More Books

Students also viewed these Finance questions

Question

★★★★★

6. Use the same set of information given in the problem above. (a) Use S&P 500 future prices to calculate the implied dividend yield on S&P 500. For simplicity, assume you can borrow or deposit money...

Answered: 1 week ago

Question

★★★★★

KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent, and the current stock price of KYC is 100. (a) Price a...

Answered: 1 week ago

Question

★★★★★

You have been hired to generate a list of prime numbers up to some user-specified bound. To do this, we are going to implement of the watershed algorithms of ancient Greek mathematics. This technique...

Answered: 1 week ago

Question

★★★★★

Find the lengths of the curves. x = 5 cos t - cos 5t, y = 5 sin t - sin 5t, 0 t /2

Answered: 1 week ago

Question

★★★★★

Multiply. a. (x - 3) (2x + 4) b. (x2 + 1) (x + 2)

Answered: 1 week ago

Question

★★★★★

What part did word of mouth play in the success of Bootss miracle cream? Alliance Boots is one of only three retailers (including Tesco and Marks and Spencer) in the UK to break the 1 billion profit...

Answered: 1 week ago

Question

★★★★★

3. Tie the new material to previous lessonsshow an outline or map of how the new topic fits with previous and upcoming material.

Answered: 1 week ago

Question

★★★★★

1. What function or functions does Mei Lis attitude toward the advertisements that line the street where she lives play? 2. Using the psychoanalytic approach to motivation, how does Mei Li deal with...

Answered: 1 week ago

Question

★★★★★

Kingbird Inc. has decided to purchase equipment from Central Michigan Industries on January 2, 2025, to expand its production capacity to meet customers' demand for its product. Kingbird issues an...

Answered: 1 week ago

Question

★★★★★

Georgia Orchards produced a good crop of peaches this year. After preparing the following income statement, the company believes it should have given its No. 3 peaches to charity and saved its...

Answered: 1 week ago

Question

★★★★★

There have been a wide range of impacts on the U.S. economy and global economy as a result of the spread of COVID19. What are some of the products whose demand curves increased? Which determinants of...

Answered: 1 week ago

Question

★★★★★

Explain the goal of a denial-of-service (DoS) attack. How are these attacks initiated? How can they be prevented?

Answered: 1 week ago

Question

★★★★★

Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue any new common stock during the year. A total...

Answered: 1 week ago

Question

★★★★★

CIRCUIT #2 5. Once again, put three resistors and a battery on the work area. Change each of the resistances to the values in the table below. Use a battery voltage of 12 volts. Build the circuit...

Answered: 1 week ago

Question

★★★★★

Three steel plates are joined together using two rivets that have a diameter of 16 mm. The plates have a width L of 8.0 cm. The central plate has a thickness of 2.0 cm and the other two plates have a...

Answered: 1 week ago

Question

★★★★★

February 1 - Brady and Manning decide to start up a partnership. Brady brings in $10 000 cash and equipment costing $60 000, with $17 000 in the accumulated depreciation account. The fair market...

Answered: 1 week ago

Question

★★★★★

Problems 4-11 (5 points each, 40 points total) 4. The best interpretation of the word "credit" is the a. Right side of an account. b. Left side of an account. c. Increase side of an account. d....

Answered: 1 week ago

Question

★★★★★

Explain why each of the following is either a private good or a public good: traffic lights, in line skates, a city park, a chicken salad sandwich, a tennis racket, national defense, a coastal...

Answered: 1 week ago

Question

★★★★★

Derive the density for the Gumbel and Clayton copulae.

Answered: 1 week ago

Question

★★★★★

Assume deterministic interest rates. Following our discussion in Section 12.1.4, derive the quanto effect of having a stochastic funding spread assuming that the asset follows a standard lognormal...

Answered: 1 week ago

Question

★★★★★

The Ho-Lee model assumes that the short rate has stochastic differential equation dr t = (t)dt + crdW t . Note that the money market account is defined via B T = e 0 T rudu and the discount bond is...

Answered: 1 week ago

Question

★★★★★

Because of bad weather, the number of days next week that the captain of a charter fishing boat can leave port is uncertain. Let x = number of days that the boat is able to leave port per week. The...

Answered: 1 week ago

Question

★★★★★

The mean number of errors per page made by a member of the word-processing pool for a large company is thought to be 1.5, with the number of errors distributed according to a Poisson distribution. If...

Answered: 1 week ago

Question

★★★★★

The Employee Benefit Research Institute reports that 69% of workers reported that they and/or their spouse had saved some money for retirement. a. If a random sample of 30 workers is taken, what is...

Answered: 1 week ago

Previous Question Next Question