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This question is multi tiered, but I ONLY need answer for #4. I have included the other parts of the question to provide needed information
This question is multi tiered, but I ONLY need answer for #4. I have included the other parts of the question to provide needed information and context, without violating the 1 question rule. Again, I ONLY need answer for #4. Please and thanks!
this is the question I need, #4
D Question 1 1 pts Questions 1-8 are based on the following information: Boeing sold an aircraft, Boeing 777, to Lufthansa Airlines, a German company, and billed 30 million payable in one year. Boeing is concerned with the USD proceeds from international sales and would like to control exchange risk. The current spot exchange rate is $1.05/ and one-year forward exchange rate is $1.10/ at the moment. Boeing can buy a one-year option on curo with a strike price of S1.12/ for a premium of $0.02 per euro. Currently, the annual interest rate is 5% in the euro zone and 600 in the US This is an case for Boeing. o A/P D Question 2 1 pts If Boeing wants to hedge the transaction exposure using forward, Boeing should enter a million due in one year. position in a forward contract of 30 o long o short D Question 3 1 pts If Boeing enters a forward euro contract today, the guaranteed dollar proceeds for this international sale in one year should be S million. D Question 4 1 pts If Boeing wants to hedge the transaction exposure using money market hedge, Boeing should e borrow PV of euro and buy USD today, and deposit USD in the bank and sit on it. o buy PV of euro today using USD, and deposit euro in the bank and sit on it
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