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what is the Money Market Euro Amount @ 1.15 ending spot rate? What is the Options Euro Amount @ 1.30 ending spot rate? Airbus sold

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what is the Money Market Euro Amount @ 1.15 ending spot rate?

What is the Options Euro Amount @ 1.30 ending spot rate?

Airbus sold an aircraft, A400, to Delta Airlines, a U.S. company, and billed $30 million payable in six months. Airbus is concerned with the euro proceeds from international sales and would like to control exchange risk. The current spot exchange rate is $1.30/ and six-month forward exchange rate is $1.20/ at the moment. Airbus can buy a six-month put option on U.S. dollars with a strike price of 0.8/$ for a premium of 0.02 per U.S. dollar. In addition, Airbus can buy a six-month call option on U.S. dollars with a strike price of 0.85/$ for a premium of 0.03 per U.S. dollar. Currently, six-month interest rate is 2.5% (5% per annum) in the euro zone and 3.0% (6% per annum) in the U.S. The following table shows possible Euro amount Airbus receives when the actual spot rate (first row) is realized depending on different alternative decisions. The question number is in the table. All the values are euro amount at the time when $30M is received. The question mark in the table refers to the Euro amount Airbus receives. 1.30 1.25 1.20 1.15 Q? Ending spot rate ($/ Euro) Unhedged Forward Money Market Options Look up the table to answer the question. 21,428,571 22,222,222 23,076,923 24,000,000

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