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Case: Your Australian company has just made a contract to buy heavy machinery from a German company. Your company must pay German company €300,000 in three months. You have three alternatives (any combination allowed) to hedge this FX exposure: (a) buying a call option at a strike price of A$1.45 per euro. The premium for this call option is A$0.02 per euro or (b) buying a three-month euro forward contract from a German Bank, which quotes you A$1.47 per euro or (c) buying a futures contract (assuming no transaction costs and no margin account requirements) at a price of A$1.465 per euro.
As an expert FX dealer, you expect that the euro in three months (when your payment is due to German company) would be settled at A$1.48 and to your surprise, it happened so, i.e., euro settled at A$1.48 after 3-months. What would be your company's gains or losses if you did allocate €300,000 equally to option contract and futures contract to hedge this FX exposure (show your workings)?
Question: What is the call option writer's profit (loss) if the euro in three months is settled at A$1.46 (Must show your workings)? Imagine the option writer issued the contract for the entire FX exposure (i.e., €300,000).
The common stock of Placo enterprise had a market price of $12 on the day of purchased just one year ago. During the past 5 years the stock had paid a $1.
You are a life and health insurance agent for the following client:
A project has annual cash flows of $7,500 for the next 10 years and then $7,000 each year for the following 10 years. The IRR of this 20-year project is 13.96%.
Explain How much will the university receive when it issues the bond and the stated interest rate is 8 percent, but rates have risen to 10 percent in the market
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Find the after-tax return to a corporation that buys a share of preferred stock at $40, sells it at yearend at $40, and receives a $4 year-end dividend.
Banyan Co.'s common stock currently sells for $37.50 per share. The growth rate is a constant 12%, and the company has an expected dividend yield of 2%.
Calculate Marias total probate estate as it exists now - Recalculate her total probate estate if all of your recommendations are utilized by her
assume that an investor sells short 200 shares of stock at 75 per share. at what price must the investor cover the
rarons rockers is in the process of preparing a production cost budget for august. actual costs in july for 120 rocking
If the July cost was ?$39?,600 how much of the cost of operating the Maintenance Department should be allocated to each production? department?
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