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Value of Teks payables = 8,000,000 Payable due in = 180 days Given: Spot rate is 108.20/$ 6-month forward rate is 106.20/$ Teks cost of
Value of Teks payables = 8,000,000
Payable due in = 180 days
Given:
- Spot rate is 108.20/$
- 6-month forward rate is 106.20/$
- Teks cost of capital is 9.8%
- Japans 6-month deposit rate is 1.250% p.a.
- U. S. 6 month borrowing rate is 4.0% p.a.
- 6-month yen call option strike price = 108/$
- Option premium = 2.5%
- The expected spot rate can be estimated from the following information:
Possible Spot Rate in 180 days | Probability |
101.35/$ | 35% |
105.44/$ | 50% |
110.21/$ | 15% |
Remain Unhedged Convert $ to yen in 6 months.
Amount of yen payable = 8,000,000.00
Possible Spot Rate in 180 days | Total cost of buying | Probability |
101.35/$ |
| 35% |
105.44/$ |
| 50% |
110.21/$ |
| 15% |
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