10. Problem 11.19 (Hedging with Put Options) Algo eBook As treasurer of Tucson Corp. (a U.S....
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10. Problem 11.19 (Hedging with Put Options) Algo eBook As treasurer of Tucson Corp. (a U.S. exporter to New Zealand), you must decide how to hedge (if at all) future receivables of 250,000 New Zealand dollars 90 days from now. Put options are available for a premium of $0.05 per unit and an exercise price of $0.49 per New Zealand dollar. The forecasted spot rate of the NZ$ in 90 days follows: FUTURE SPOT RATE PROBABILITY $0.47 25% 0.40 0.38 40 35 Given that you hedge your position with options, create a probability distribution for U.S. dollars to be received in 90 days. Round your answers for the amount per unit received after accounting for premium to the nearest cent and for the total amount received for NZ$250,000 to the nearest dollar. Possible Spot Rate Put Option Premium Exercise Option? Amount per Unit Received Accounting for Premium Total Amount Received for NZ$250,000 Probability $0.47 $0.05 -Select- $ $ 25% $0.40 $0.05 -Select- $ 40% $0.38 $0.05 -Select- $ $ 35% Grade it Now Save & Continue Continue without saving 10. Problem 11.19 (Hedging with Put Options) Algo eBook As treasurer of Tucson Corp. (a U.S. exporter to New Zealand), you must decide how to hedge (if at all) future receivables of 250,000 New Zealand dollars 90 days from now. Put options are available for a premium of $0.05 per unit and an exercise price of $0.49 per New Zealand dollar. The forecasted spot rate of the NZ$ in 90 days follows: FUTURE SPOT RATE PROBABILITY $0.47 25% 0.40 0.38 40 35 Given that you hedge your position with options, create a probability distribution for U.S. dollars to be received in 90 days. Round your answers for the amount per unit received after accounting for premium to the nearest cent and for the total amount received for NZ$250,000 to the nearest dollar. Possible Spot Rate Put Option Premium Exercise Option? Amount per Unit Received Accounting for Premium Total Amount Received for NZ$250,000 Probability $0.47 $0.05 -Select- $ $ 25% $0.40 $0.05 -Select- $ 40% $0.38 $0.05 -Select- $ $ 35% Grade it Now Save & Continue Continue without saving
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