Explain what the firm would do

Reference no: EM131976973

Question: Forex Derivatives

Suppose the current dollar-pound exchange rate is 1.60 and a US firm expects payment for a shipment of goods to the United Kingdom in 6 months of GBP 2.4 million. The 6-month pound denominated call option on the dollar has a GBP 0.65 strike price, and is assumed to cost nothing. With numerical analysis explain what the firm would do if it purchases the 6 month call options and when it gets paid in 6 months the exchange rate at the time remains at 1.60.

Reference no: EM131976973

Questions Cloud

Compute the companys degree of operating leverage : Compute the company's degree of operating leverage. If sales increase by 10%, what amount of income will Singh Co. report?

Convex spherical mirror with a focal length : An object is placed 15.0 cm in front of a convex spherical mirror with a focal length of 10.0 cm. Approximately how far away will the image be located?

Expert financial counsel duty of reasonable care duty : Bronfman owes Selecta duty to seek expert financial counsel duty of reasonable care duty of extraordinary care fiduciary duty Item 1 to the Seagram shareholders

Find the width and the separation of the two slits : The bright bands are 1.07 cm apart, and the third bright bands on either side of the central maximum are missing in the pattern.

Explain what the firm would do : With numerical analysis explain what the firm would do if it purchases the 6 month call options and when it gets paid in 6 months the exchange rate at the time.

Write a program to select the files : You are given 6 .csv files in the attached file. You have to write a program, that will let the user select the files, one by one, or at one time

Slit for fraunhofer diffraction to apply : Both the source and screen are far enough from the slit for Fraunhofer diffraction to apply.

How these events would affect the balance sheet : How these events would affect the balance sheet and income statement by recording them in a horizontal financial statements model as indicated here.

Illuminated by a laser beam of wavelength : Two thin parallel slits that are 0.0117 mm apart are illuminated by a laser beam of wavelength 620 nm.

User Account

All Pages