Cycle & Carriage (C&C), a Malaysian importer and distributor of Mercedes Benz cars have 15 million payable
Fantastic news! We've Found the answer you've been seeking!
Question:
MYR/EURO Spot = RM4.05
MYR/EURO 30-day Forward = RM3.98
MYR/EURO 60-day Forward = RM3.825
MYR/EURO 90-day Forward = RM3.74
Fee for Forward = RM 5,000 flat rate
60-days Option Exercise Price = RM 3.825
Fee for 60-days RM3.825 exercise price Option = RM25, 000
Required
A) Explain the exact strategy and the MYR amount to be locked in if forward is used.
B) Explain the exact strategy and the MYR amount to be locked in if the option is used.
C) Given the information in the case, discuss the best course of action.
Related Book For
Financial Accounting
ISBN: 978-1259103285
5th Canadian edition
Authors: Robert Libby, Patricia Libby, Daniel Short, George Kanaan, M
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