B Ltd a US firm had exports to C Ltd a UK firm in year 2016 for
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Question:
B Ltd a US firm had exports to C Ltd a UK firm in year 2016 for 10M payable in 1 year. The interest and exchange rates applicable were as follows:
US interest rates 6.1%
UK interest rates 9.0%
Spot exchange rate $1.50/
Forward exchange rate $1.46/
The future spot rates were likely to be as follows: $1.30, $1.40, $1.46, $1.50 and $1.60
B Ltd purchased a put option on the 10M with a strike price of $1.46 with a 1 year expiry date and whose premium was $0.02 per
Required: advice on the best hedging technique for B Ltd
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date: