Question
Your car dealership, R.T. Otcasek's Fast Cars for a Double Life, owe 750,000 for several new Aston Martin 2021 Vantages in 90 days.Given the recent
Your car dealership, R.T. Otcasek's Fast Cars for a Double Life, owe 750,000 for several new Aston Martin 2021 Vantages in 90 days.Given the recent volatility in markets, the current owner, Paulina, is worried about the transaction exchange risk associated with this purchase.You collect the following information: the current spot rate is $1.40/; the annualized 3-month $ interest rate is 12%; and the premiums for a call and put (payable today) in the exact amount of the payable and with a strike price of $1.39/are $0.010/ and $0.027/, respectively.Paulina would like you to calculate how much you would need to pay (cash outflows should entered as a negative number) for the Aston Martins in $ after hedging with options if the exchange rate in 90 days is $1.53/ (in $, rounded to the nearest $0.01)?
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