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You are buying a boat from a company that builds custom boats. You would like a boat priced at $60,000 for delivery June 15, 2018. As the company you are buying from operates from an offshore island location, they prefer all payments be in Bitcoin. You negotiate a deal with the company to buy the boat for $6,000 in cash today as a down payment and a payment of 5 Bitcoins in June 2018 when the boat is delivered.
(a) Explain the currency risk you are taking with this contract
(b) Describe (in general) of hedging the risk in the transaction above using (i) a forward contract and (ii) an alternative method of hedging. (Note you can assume standard derivative contracts are available).
(c) Describe (in general) 2 ways the seller of the boat can hedge the above contract
(d) Draw a diagram showing the hedge in part (b) using a forward contract. Your diagram should show the range of payoffs from the unhedged position, the hedge instrument and the net position
garnett jackson the founder and ceo of tech tune-ups stared out the window as he finished his customary peanut butter
You have a $1million portfolio consisting of $250,000 investment in each of 4 different stocks. The portfolio has a beta of 2.0. you are considering selling $250, 000 worth of one stock with beta of 1.6 and using the proceeds to purchase another stoc..
Budget assumptions for this exercise include both inpatient and outpatient revenue and expense. Assumptions are as follows: As to the initial budget: The budget anticipated 30,000 inpatient days this year at an average of $650 revenue per day. comple..
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The majority of an established firm's capital is generated: When sales are made without the accompaniment of a formal debt contract, the sales are said to be on:
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