How many dollars will the company pay

Assignment Help Finance Basics
Reference no: EM132097188

A US company expects to pay 4,000,000 Japanese yen 30 days from now. It decides to hedge thee position by buying Japanese yen forward. The current spot rate of the yen is $.0089, while the forward rate is $0.0077. The firm expects the spot rate in 30 days to be $.0094. Based on its expectations the company enters into derivative contracts to maximize its profits. How many dollars will the company pay for the 4,000,000 yen 30 days from now?

Reference no: EM132097188

Questions Cloud

What is the expected return of a new portfolio : Refer to the information above. What is the expected return of a new portfolio that is 60% invested in Portfolio R and 40% in Portfolio S?
How much must you donate today to fund this award : How much must you donate today to fund this award? Round your answer to the nearest dollar.
Forecast of the peso spot rate : What is the approximate 10-year forecast of the peso's spot rate if the 10-year forward rate is used as a forecast?
Execute locational arbitrage : Given this informa­tion, what would be your gain if you use $4,500,000 and execute locational arbitrage?
How many dollars will the company pay : Based on its expectations the company enters into derivative contracts to maximize its profits. How many dollars will the company pay for the 4,000,000 yen
What is the net present value of the norwegian project : The current exchange rate of the Norwegian kroner is $.135. Baps' exchange rate forecast for the Norwegian kroner over the project's lifetime is listed below:
What is the net amount paid : Assuming that the spot rate in 90 days is $0.75, what is the net amount paid, assuming Cane wishes to minimize its cost?
Money market hedge of logic inc : Logic Inc. needs €1,180,000 in 30 days. Delaney can earn 0.03 annualized on a German security. The current spot rate for the euro is $1.00.
What is the net amount received by the corporation : If the spot rate at the time of maturity is $0.75, what is the net amount received by the corporation if it acts rationally?

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the dividend yield

The next dividend payment by ECY, Inc., will be $1.60 per share. The dividends are anticipated to maintain a growth rate of 6 percent, forever. The stock currently sells for $30 per share

  Calculate the cash down payment for the loan

Bob and Carol Gibbs are set to move into their first apartment. They visited Furniture R'Us, looking for a dining room table and buffet.

  What should be the coupon rate on the given bonds

Bavarian Sausage wants to issue a 10-year coupon bond. The face value of the bond is $1,000 and the bond makes SEMIANNUAL coupon payments.

  New project whose data shown below

Temple Corp. is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, would be depreciated by the straig

  What debt ratio should binomial use to calculate its wacc

It has 520,000 shares of common stock outstanding, which trade on the Wichita Stock Exchange at $16.40 per share.

  Manufacturing overhead allocation rate

Determine XYZ's manufacturing overhead allocation rate.  Determine the amount of manufacturing overhead allocated to Job #24.

  Compute the company expected rate of return

A company's risk-free market return is 3%, the market expected return is 10% and the beta is 0.75, compute the company's expected rate of return?

  Review the modified black-scholes option pricing model

Currency options are defined as the right to buy or sell currencies at specified prices. Review the modified Black-Scholes option pricing model (also known as the Garman-Kohlhagen-Black-Scholes model) here: Resolution: The Authority on Derivative Pri..

  How do the given tools impact the economy

What are the primary goals of the monetary policy conducted by the Federal Reserve? What tools are utilized? How do these tools impact the economy?

  What would the cost of equity from new stock be

If the company were to issue new stock, it would incur a 14% flotation cost. What would the cost of equity from new stock be? Round your answer to two decimal places.

  Determine the maximum rate of overtime premium

All labour and materials costs are variable. Skilled labour is paid £12 an hour, and unskilled labour is paid £10 an hour. All references to labour costs above, are based on basic rates of pay. Skilled labour is scarce, which means that the busine..

  What are break-even sales at the given point

Your business plan for your proposed start-up firm envisions first-year revenues of $120,000, fixed costs of $30,000, and variable costs equal to one-third of revenue.Before profits turn negative, what are break-even sales at this point?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd