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You have a 1 million payable due in 3 months. Show on a chart a) The dollar cost of the unhedged payable as a function
You have a 1 million payable due in 3 months. Show on a chart
- a) The dollar cost of the unhedged payable as a function of the spot exchange rate 3 months from now
- b) The profit (loss) from a 3-month 1 million call option with a strike price of $1.75/ and a premium of $0.40/.
- c)Yourtotalcashflow3monthsfromnow
- d) What would be your total cash flow if you hedged with a forward contract. Assume that the forward price is also $1.75/
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Financial Management Theory and Practice
Authors: Eugene Brigham, Michael Ehrhardt, Jerome Gessaroli, Richard Nason
2nd Canadian edition
176517308, 978-0176517304
