Question: A U . S . firm has a debt obligation of 2 0 1 million payable in one year. The current spot rate is 1
A US firm has a debt obligation of million payable in one year. The current spot rate is per US dollar and the oneyear forward rate is per US dollar. Additionally, a oneyear Call option on the Yen with a strike price of $ per yen can be purchased for a premium of cent per yen. The riskfree moneymarket rate in Japan is and the riskfree moneymarket rate in the US is Calculate the future US dollar cost of meeting this obligation using a money market hedge.
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