Initial dollar investment from holding nardasausau stock

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Reference no: EM132061493

1. An American firm sells farm equipment to a British company for ?250,000 to be paid in 180 days. The current exchange rate is $1.98/?. The exporter hedges its exchange rate risk by buying a put option on ?250,000 with the strike exchange rate of $1.92/?. The put expiring in 180 days cost the firm $5,000. What is the dollar amount the American firm will net on this transaction if the exchange rate is $1.96/? in 180 days?

2. One year ago, a U.S. investor converted dollars to yen and purchased 100 shares of Nardasausau stock in a Japanese company at a price of 3,150 yen per share. The total purchasing cost was 315,000 yen. At the time of purchase, in the currency market 1 yen equaled $0.00952. Today, Nardasausau stock is selling at a price of 3,465 yen per share, and in the currency market $1 equals 130 yen. The stock does not pay a dividend. If the investor were to sell the stock today and convert the proceeds back to dollars, what would be his realized return on his initial dollar investment from holding Nardasausau stock?

Reference no: EM132061493

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