You source Ice Cubes to sell in the US from an Eskimo village and you owe them DKK 3,000,000 which is due in 60 days. Greenland is part of Denmark and uses Danish Krona (DKK) as its currency. If the Currency exchange rates and interest rates are a as follows what is your hedging decision? Data Table Amount (to be paid in DKK) DKK3,000,000 Days 60 Spot DKK5.7200/$ Forward premium or discount (calculate) DKK is sold at Premium of 2% Expected change in FX rate (calculate) DKK is sold at Premium of 1.50% Identify what kind of Option should be used Premium - CALL Option 1% Premium - PUT Option 2% CALL Strike Price DKK5.7500/$ PUT Strike Price DKK5.7500/$ Identify which rate should be used US borrowing AND investing 5% and 3% respectivelly Danish borrowing AND investing 6% and 4% respectivelly Cost of Capital (WACC) 10% Using data in the table above, you need to calculate proceeds of different hedging alternatives.

You source Ice Cubes to sell in the US from an Eskimo village and you owe them DKK 3,000,000 which is due in 60 days. Greenland is part of Denmark and uses Danish Krona (DKK) as its currency. If the Currency exchange rates and interest rates are a as follows what is your hedging decision? Data Table Amount (to be paid in DKK) DKK3,000,000 Days 60 Spot DKK5.7200/$ Forward premium or discount (calculate) DKK is sold at Premium of 2% Expected change in FX rate (calculate) DKK is sold at Premium of 1.50% Identify what kind of Option should be used Premium - CALL Option 1% Premium - PUT Option 2% CALL Strike Price DKK5.7500/$ PUT Strike Price DKK5.7500/$ Identify which rate should be used US borrowing AND investing 5% and 3% respectivelly 6% and 4% respectivelly Danish borrowing AND investing Cost of Capital (WACC) 10% Using data in the table above, you need to calculate proceeds of different hedging alternatives. Question 1 1/1 pts Remain Unhedged (1) Compute the expected FX rate of DKK/$ in 60 days. 5.7057 rrect Question 2 0 / 1 pts Remain Unhedged (2) How much will you have to pay in USD, if you choose to Remain Unhedged. 534,902.38 wered Question 3 0/1 pts Forward hedge (1) Compute the 60-day forward FX rate of DKK/$. (Round your answer to 4 decimals). answered Question 4 0 / 1 pts Forward hedge (2) Find how much you will have to pay in 60 days if you choose to hedge in the forward market. (Round your answer to 2 decimals). answered Question 5 0/1 pts Money market hedge (1) Find the amount you need to invest today in DKK. answered Question 6 0 / 1 pts Money market hedge (2) How much USD will you need to spend today to buy DKK for the investment (Hint: translate the DKK from previous question to USD). Unanswered Question 7 0/1 pts Money market hedge (3) Adjust the amount in USD from the previous questions for the Time Value of Money (Hint: find the future value in 60 days of the amount from the previous question). Incorrect Question 8 0/1 pts Option hedge (1) What option should you buy? Call Put Unanswered Question 9 0/ 1 pts Option hedge (2) Calculate the cost of the option (premium) in USD. wered Question 10 0/1 pts Option hedge (3) Adjust the option cost for the Time Value of Money (Hint: find future value in 60 days of the option premium from the previous question). rect Question 11 0/1 pts Option hedge (4) If you exercise the option at a strike price, how much will you have to pay in USD for the needed amount of DKK? 521,739.13 rect Question 12 0 / 1 pts Option hedge (5) Find the total cost of the Payables if you hedge on the option market? (Hint: compute total cost including the FV of the option premium) 532,403.47 You source Ice Cubes to sell in the US from an Eskimo village and you owe them DKK 3,000,000 which is due in 60 days. Greenland is part of Denmark and uses Danish Krona (DKK) as its currency. If the Currency exchange rates and interest rates are a as follows what is your hedging decision? Data Table Amount (to be paid in DKK) DKK3,000,000 Days 60 Spot DKK5.7200/$ Forward premium or discount (calculate) DKK is sold at Premium of 2% Expected change in FX rate (calculate) DKK is sold at Premium of 1.50% Identify what kind of Option should be used Premium - CALL Option 1% Premium - PUT Option 2% CALL Strike Price DKK5.7500/$ PUT Strike Price DKK5.7500/$ Identify which rate should be used US borrowing AND investing 5% and 3% respectivelly 6% and 4% respectivelly Danish borrowing AND investing Cost of Capital (WACC) 10% Using data in the table above, you need to calculate proceeds of different hedging alternatives. Question 1 1/1 pts Remain Unhedged (1) Compute the expected FX rate of DKK/$ in 60 days. 5.7057 rrect Question 2 0 / 1 pts Remain Unhedged (2) How much will you have to pay in USD, if you choose to Remain Unhedged. 534,902.38 wered Question 3 0/1 pts Forward hedge (1) Compute the 60-day forward FX rate of DKK/$. (Round your answer to 4 decimals). answered Question 4 0 / 1 pts Forward hedge (2) Find how much you will have to pay in 60 days if you choose to hedge in the forward market. (Round your answer to 2 decimals). answered Question 5 0/1 pts Money market hedge (1) Find the amount you need to invest today in DKK. answered Question 6 0 / 1 pts Money market hedge (2) How much USD will you need to spend today to buy DKK for the investment (Hint: translate the DKK from previous question to USD). Unanswered Question 7 0/1 pts Money market hedge (3) Adjust the amount in USD from the previous questions for the Time Value of Money (Hint: find the future value in 60 days of the amount from the previous question). Incorrect Question 8 0/1 pts Option hedge (1) What option should you buy? Call Put Unanswered Question 9 0/ 1 pts Option hedge (2) Calculate the cost of the option (premium) in USD. wered Question 10 0/1 pts Option hedge (3) Adjust the option cost for the Time Value of Money (Hint: find future value in 60 days of the option premium from the previous question). rect Question 11 0/1 pts Option hedge (4) If you exercise the option at a strike price, how much will you have to pay in USD for the needed amount of DKK? 521,739.13 rect Question 12 0 / 1 pts Option hedge (5) Find the total cost of the Payables if you hedge on the option market? (Hint: compute total cost including the FV of the option premium) 532,403.47