Question
In: Finance
You are a US firm and expect to receive 10,000,000 Malaysian Ringitt (MR) from a customer...
You are a US firm and expect to receive 10,000,000 Malaysian Ringitt (MR) from a customer for sure after six months. How would you achieve a complete hedge if you had the following: Spot rate $0.22/MR, six month US$ risk-free rate = 2.5 percent and six month MR risk-free rate is 3.5 percent. Describe the transactions in detail. 2 Suppose the payment in MR from your customer is not certain, and, in addition to the spot and risk-free rates mentioned above, you also have an options market in which MR calls trade. How would you construct the appropriate hedge in this case? Describe the transactions in detail.
Solutions
jeff jeffy answered 7 months agoRelated Solutions
You expect to receive $600 every three months beginning fifteen months from today and expect to...
You
expect to receive $600 every three months beginning fifteen months
from today and expect to receive these payments forever. If the
interest rate is 9% EAR, what is this stream of cash flows worth
today? （please slso show the resolution using financial
calculator)
A firm would like to know the proportion of it employees that expect to receive a...
A
firm would like to know the proportion of it employees that expect
to receive a raise within the next year the firm survey is 150
employees and finds that 60 expect to raise construct a 90%
confidence interval for the population proportion
a) what is the sample proportion
b) State the critical value
c) calculate the margin of error
d) State the lower and upper values for the confidence
interval
Trefor, a US firm, has a sterling (£) receivable of £300,000 from a UK customer due...
Trefor, a US firm, has a sterling (£) receivable of £300,000
from a UK customer due one year from now. Trefor has no use for
sterling currency and will exchange the receipt into US dollars
($). The spot exchange rate now is £1=$1.34 and the one- year
forward exchange rate is £1=$1.31. Assume the forecasted spot rate
in one year’s time is £1=$1.28 or £1=$1.38, with equal probability.
The discount rate is zero.
(a) What is the expected dollar value...
3. Trefor, a US firm, has a sterling (£) receivable of £300,000 from a UK customer...
3. Trefor, a US firm, has a sterling (£) receivable of £300,000
from a UK customer due one year from now. Trefor has no use for
sterling currency and will exchange the receipt into US dollars
($). The spot exchange rate now is £1=$1.34 and the oneyear forward
exchange rate is £1=$1.31. Assume the forecasted spot rate in one
UL20/0419 Page 5 of 8 year’s time is £1=$1.28 or £1=$1.38, with
equal probability. The discount rate is zero. (a) What...
Trefor, a US firm, has a sterling (£) receivable of £300,000 from a UK customer due...
Trefor, a US firm, has a sterling (£) receivable of £300,000
from a UK customer due one year from now. Trefor has no use for
sterling currency and will exchange the receipt into US dollars
($). The spot exchange rate now is £1=$1.34 and the oneyear forward
exchange rate is £1=$1.31. Assume the forecasted spot rate in one
UL20/0419 Page 5 of 8 year’s time is £1=$1.28 or £1=$1.38, with
equal probability. The discount rate is zero.
(a) What is...
Trefor, a US firm, has a sterling (£) receivable of £300,000 from a UK customer due...
Trefor, a US firm, has a sterling (£) receivable of £300,000
from a UK customer due one year from now. Trefor has no use for
sterling currency and will exchange the receipt into US dollars
($). The spot exchange rate now is £1=$1.34 and the oneyear forward
exchange rate is £1=$1.31. Assume the forecasted spot rate in one
year’s time is £1=$1.28 or £1=$1.38, with equal probability. The
discount rate is zero.
(a) What is the expected dollar value of...
Trefor, a US firm, has a sterling (£) receivable of £300,000 from a UK customer due...
Trefor, a US firm, has a sterling (£) receivable of £300,000
from a UK customer due one year from now. Trefor has no use for
sterling currency and will exchange the receipt into US dollars
($). The spot exchange rate now is £1=$1.34 and the one-year
forward exchange rate is £1=$1.31. Assume the forecasted spot rate
in one year’s time is £1=$1.28 or £1=$1.38, with equal probability.
The discount rate is zero.
(a) What is the expected dollar value of...
i)No excel please . A US firm will receive 125 million pounds in 6 months from...
i)No excel please . A US firm will receive 125 million pounds in
6 months from its overseas operations. The company could buy a 6
month forward contract on 125 million pounds to hedge its foreign
exchange risk.T of F
ii)8The peso/Canadian dollar spot rate is C$.12/MP and the peso
sells at a 3% forward premium. Find the current forward rate.
C$.1212/MP bC$.1164/MP c C$8.0989/MP
dNone of the above
iii)In general, hedging with derivative contracts involves
taking a position in...
1.. You expect to receive $500 in five years from an investment. What is this investment...
1.. You expect to receive $500 in five years from an
investment.
What is this investment worth today if the effective annual
interest rate is 12%?
(Round to the nearest cent and do not enter the dollar sign)
2..If $300 is invested at a 4% interest rate, how much compound
interest will be earned in 4 years?
(Round to the nearest cent and do not enter the dollar sign)
If you expect to receive $100 in one year from now, $200 two years from now,...
If you expect to receive $100 in one year from now, $200 two
years from now, and $150 three years from now, How much this cash
flow is worth today if the interest rate is 10%
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