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Super deal limited has delivered 500,000 devices to an American Company priced in US dollars at $24 each on a three month credit Given Interest
Super deal limited has delivered 500,000 devices to an American Company priced in US dollars at $24 each on a three month credit Given Interest rates p.a. for US is 12% and Kenya is 10%. Spot rate $1/Kes. 76.22-92 Three month forward rate $1/Kes.64.23-93. A three month dollar call option is available at a premium of $25,000 at an exercise rate of Kes 66.53 A three month dollar put option is available at a discount rate of $10,000 at an exercise rate of Kes.65.60 Required: Using suitable computations, illustrate three strategies available to super deal limited in managing this exposure and advice on the suitable techniques. (25 marks
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