Question: A company based in the US has bought components from Japan for 200 million, payable in four months' time. The following data is available:

A company based in the US has bought components from Japan for

A company based in the US has bought components from Japan for 200 million, payable in four months' time. The following data is available: Ask Spot rate: Bid 94.0000 94.0040 JPY/USD 86.1000 89.7000 JPY/USD 4 month forward rate: Euroyen borrowing interest rate: Euroyen investment interest rate: Strike price for a call option: Premium for this call option: The company's cost of capital Required Evaluate the company's hedging options: 1- Remained Uncovered 2- Forward market hedge 3- Money market hedge 4- Call option hedge 0.4% per annum 0.1% per annum 92.0000 JPY/USD 2.0% 12% per annum

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