What is carriers break even 90 day spot price

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Reference no: EM131278638

1. Develop a table showing Carrier's Can$ profit and loss associated with the futures position and the options position within its range of expected exchange rates at US$0.01 increments. Ignore transaction costs and margins.

2. Show the total Can$ cash flow to Carrier (hedge plus the gain or loss on the hedge) using the options and futures contracts, as well as the unhedged position within the range of expected future exchange rates.

3. What is Carrier's break-even 90-day spot price on the option contracts? On the futures contracts?

4. Would you recommend Carrier hedge with the futures contracts or the options contracts? Why?

Reference no: EM131278638

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