Down side risk for peso in the foreign exchange market

Assignment Help Financial Management

Reference no: EM131837557

Your company is concerned about the current volatility of UDS vs. peso exchange rate and plans to repatriate 8 million peso per quarter to the US. Your boss ask you to find out the possibility to hedge the down side risk (depreciation of peso against USD) for peso in the foreign exchange market. You did some search online and found the following information.

The current spot price S0 = $0.0501/peso

Forecast market fluctuation range for peso $0.053-0.047 per peso

3-mo. call option X=$0.04955/peso, put option X= $0.04821/peso 500,000 peso per contract @ premium $0.000025/peso

3-mo. future contract @ $0.05049/peso and 500,000 peso per contract.

Do you need put or call option? How many option future contracts or option contracts you would need? Do you need over/under hedged?

Reference no: EM131837557

Questions Cloud

Compute the current ratio as of the beginning of the month : Gwynn Incorporated had the following transactions involving current assets and current liabilities during February 2017.

Learned about managing a disaster : "What would you say are your top three lessons learned about managing a disaster

Problem regarding the temple of heaven : 1) General Description - Why was it built? Is its location significant?

What is the equivalent annual cost of this equipment : Bridgton Golf Academy is evaluating new golf practice equipment. What is the equivalent annual cost (EAC) of this equipment?

Down side risk for peso in the foreign exchange market : find out the possibility to hedge the down side risk for peso in the foreign exchange market.

Prepare analysis of the income statement data : Comment on the relative profitability of the companies by computing the 2017 return on assets and the return on common stockholders' equity for both companies.

Write a paper about the interview subject : Students shall interview a person who currently or has worked in a management position and write a 4-6 page paper about the interview subject

Write a paragraph or more for each given influence : Write a paragraph or more for each influence. In essence, these paragraphs encapsulate the most important things you took away from the three experiences.

How walmarts choice of market focus contributes : Post an analysis of the role of strategic planning in establishing competitive advantage. Your analysis should include the following:

User Account

All Pages