VP Amount Option information $1,000,000.00 CALL or PUT? C E F Accounts Payable of TRL1,000,000 Premium (today) FV of Premium in 1 month trike Price Premium 0.34 per TRL 1.25% of the current spot rate for one foreign currency. 9 Money Market information US 10 nvesting (Lending) Rate 2.0% Turkey 7.5% 11 borrowing Rate 3.0% 8.0% 12 13 INVEST or BORROW TRL? How much to Invest/borrow in TRL? How much it worths in dollars today? FV of borrowing or investing 14 achange Rate Information 15-month Forward Rate 16 Current Spot Rate SS 03400 per TAL 03200 per TRL BUY or SELL TRI. Forward? C Money Market Hedge Cash Flow Cash Flow Cash outflows 1 Month from Now Option Hedge Exercise Decision 17 18 19 Unbedged Forward Hedge 20 pot rate in 1 month Strike Price Cash Flow Cash Flow 21 0.25 034 22 0.26 034 23 0.27 034 24 028 036 25 029 0.34 26 03 034 27 031 034 28 032 0.34 29 033 036 30 0.34 0.35 31 035 034 32 035 030 33 037 0.36 34 9.33 0.34 32 8.39 038 14 94 036 37 948 0.34 38 0.42 034 39 049 034 42 41 42 43 14 47 60 47 44 411 so + Break-even spot rate between Option Hedge and Money Market Hedge - You don't have to Which alternative is better if Spot > BE? Break-even spot rate between Money Market and Forward Hedges -Just Explain your answer