Question
The Mexican company, Tractores Belarus , sold 6 tractors B1021 to Syngenta , a Swiss Agrochemical company, for 3.55 Million Swiss Francs (CHF), payable in
The Mexican company, Tractores Belarus, sold 6 tractors B1021 to Syngenta, a Swiss Agrochemical
company, for 3.55 Million Swiss Francs (CHF), payable in one year. The current spot rate is MXN/CHF 13.5374 and the one-year forward rate is MXN/CHF 13.2743. The annual interest rate is 1.54% in Switzerland and 3.49% in Mexico. Belarus can also buy a one-year put option on CHF at the strike price of MXN/CHF 13.2181 for a premium of MXN/CHF 0.195.
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Compute the future Mexican Pesos proceeds of this operation using a forward hedge.
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Handbook Of Asset And Liability Management Volume 2
Authors: S. A. Zenios, W. T. Ziemba
1st Edition
0444528024, 978-0444528025
