TEK wishes to hedge a EUR4,000,000 account receivable arising from a sale to Olivetti (Italy). Payment from Olivetti is due in three months. TEK's Italian unit does not have ready access to local currency borrowing, eliminating the money market hedge alternative. Citibank has offered TEK the following quotes: Spot rate USD1.2000/EUR 3-month forward rate USD 1.2180/EUR 4.2% per year Three-month euro interest rate 3 month put option on euros at strike price of USD 1.0800/EUR 3.4% TEK's weighted average cost of capital 9.8% In the context of this information, match the following graph with the appropriate labels (note there are fewer blanks than available responses): A Gain B D SO Loss What is the label for line A? What is the label for line B? What is the label for line C? What is the label for line D? What is the label for line E? What is the label for line F? Choose... USD32,000 Premium USD1:2180/EUR1 Short Forward USD1.2260/EUR1 USD1.2100/EUR1 Put Option Hedge -USD32,000 S(USD/EUR) 90 days Hedged Receivable Unhedged Receivable Forward Market Hedge What is the label for line G? What is the label for line H? TEK wishes to hedge a EUR4,000,000 account receivable arising from a sale to Olivetti (Italy). Payment from Olivetti is due in three months. TEK's Italian unit does not have ready access to local currency borrowing, eliminating the money market hedge alternative. Citibank has offered TEK the following quotes: Spot rate USD1.2000/EUR 3-month forward rate USD 1.2180/EUR 4.2% per year Three-month euro interest rate 3 month put option on euros at strike price of USD 1.0800/EUR 3.4% TEK's weighted average cost of capital 9.8% In the context of this information, match the following graph with the appropriate labels (note there are fewer blanks than available responses): A Gain B D SO Loss What is the label for line A? What is the label for line B? What is the label for line C? What is the label for line D? What is the label for line E? What is the label for line F? Choose... USD32,000 Premium USD1:2180/EUR1 Short Forward USD1.2260/EUR1 USD1.2100/EUR1 Put Option Hedge -USD32,000 S(USD/EUR) 90 days Hedged Receivable Unhedged Receivable Forward Market Hedge What is the label for line G? What is the label for line H