SAP (a German company) bought Qualtrics for $8 billion in 2018. The deal was to close...

SAP (a German company) bought Qualtrics for $8 billion in 2018. The deal was to close in 12 months. The current exchange rate between USD and Euro was $1.185 at the time of the deal. The exchange rate forecast was for Euro to depreciate against the USD, but the exact decline is not known. SAP decided to hedge with derivatives and purchased enough options for USD. The call option with strike price of $1.18 per Euro is selling for the price of $0.005 USD. The put option with strike price of $1.18 is selling for $0.01. Which option should SAP use? What is the profit/loss from the hedge if the exchange rate turns out to be $1.165 in 12 months? What about if the rate is $1.19?

Expert Solution

jeff jeffy answered 4 months ago

a) A Pakistani company bought a machine from a German supplier for €200,000 on 1 March...

a) A Pakistani company bought a machine from a German supplier for €200,000 on 1 March when the exchange rate was Rs. 120/€. By 31 December, the end of the company’s accounting year, the exchange rate was Rs. 110/€. At 31 December, the Pakistani company had not yet paid the German supplier any of the money that it owed for the machine. Required Show the amounts that must be recognised to record this transaction. (05) b) A Pakistani company...

What are the key requirements to close the deal and secure a new client as a...

What are the key requirements to close the deal and secure a new client as a long-term customer for a successful wealth manager ? (300words)

In sales and marketing, we are motivated to sell and close the deal. On a website,...

In sales and marketing, we are motivated to sell and close the deal. On a website, for the most part, especially the ecommerce (sites where you can order) you want people to buy. According to some sources the abandon rate for shopping cards is over 67% (how often do you abandon a shopping cart?) In this discussion, talk about what design or copy styles keep you engaged? What do you think organizations can do to "close the deal" or get...

On May 8, 2018, Leon’s Kitchen Hut bought a set of pots with a $108 list...

On May 8, 2018, Leon’s Kitchen Hut bought a set of pots with a $108 list price from Lambert Manufacturing. Leon’s receives a 35% trade discount. Terms of the sale were 2/10, n/30. On May 14, Leon’s sent a check to Lambert for the pots. Leon’s expenses are 25% of the selling price. Leon’s must also make a profit of 12% of the selling price. A competitor marked down the same set of pots 35%. Assume Leon’s reduces its selling...

8. German Company, PAS software is developing an ERP (Enterprise Resource Planning) system for sale to...

8. German Company, PAS software is developing an ERP (Enterprise Resource Planning) system for sale to mid-size companies around the world. Software development started during 2018, during which time $45 million was incurred. During 2019, and additional $60 million was incurred, with $10 million of this incurred after technological feasibility of the new software had been established. Record the journal entry for the 2019 software development costs. Refer back to question 8. Assume this product was released to customers in...

Congress just passed close to a $500 billion increase in government spending: A. How will this...

Congress just passed close to a $500 billion increase in government spending: A. How will this impact the Federal Deficit and the National Debt? What are the pros and cons of running such a large deficit and debt?

o close an inflationary expenditure gap of $20 billion in an economy with a marginal propensity...

o close an inflationary expenditure gap of $20 billion in an economy with a marginal propensity to consume of 0.8, it would be necessary to decrease the aggregate expenditures schedule by $20 billion. decrease the aggregate expenditures schedule by $4 billion. increase the aggregate expenditures schedule by $4 billion. increase the aggregate expenditures schedule by $20 billion.

Australia’s real GDP was $A1,730 billion in 2017 and $A1,782 billion in 2018. Australia’s population was...

Australia’s real GDP was $A1,730 billion in 2017 and $A1,782 billion in 2018. Australia’s population was 24.6 million in 2017 and 25.0 million in 2018. Calculate The growth rate of real GDP. The growth rate of real GDP per person. The approximate number of years it will take for real GDP per person in Australia to double if the current real GDP growth rate and population growth rate are maintained.

Congress just passed close to a $500 billion increase in government spending: B. How will...

Congress just passed close to a $500 billion increase in government spending: B. How will this impact U.S. national savings, investment, capital per worker, output per worker and the steady state in Solow’s Growth Model. Make sure to include an intuitive and graphical analysis as well as the policy recommendations in Solow’s growth model.

Congress just passed close to a $500 billion increase in government spending: C. How will...

Congress just passed close to a $500 billion increase in government spending: C. How will this impact C, AD, Prices and inflation, output, and unemployment? Make sure to include an analysis using the intermediate run AD/AS model with both an intuitive and graphic analysis. (Assume that the AS supply curve is vertical like it is in the Classical Model).

Question