help me question a and b in table 3 and 4 pls. im not sure am i right

Scenario 2:1 Considering the calculations, you have done so far, you need to attend to a number of import and export transactions for goods that companies in the United States expressed interest in. The first transaction is for the import of good quality wines from France, since a retail liquor trading chain customer in the United States, for who you have been doing imports over the past five years has a very large order this time. The producer in France informed you that the current cost of the wine that you want to import is 62,500,000. The wine in France can be shipped to the United States immediately but you have three months to conduct payment. The second transaction is for the export of 3d printers manufactured in the U.S.A. The country where it will be exported to is Britain. The payment of 2,500,000 for the export to Britain will be received twelve months from now. You consider different transaction hedges, namely forwards, options and money market hedges. You are provided with the following quotes from your bank, which is an international bank with branches in all the countries: Forward rates: Currencies Spot 3 month (906 month (180 9 month (270 12 month (360 days) days) days) days) S/E 1.30009 1.30611 131217 1.31825 1.32436 S/C 1.14134 1.14743 1.15354 1.15969 1.16587 Bank applies 360 day-count convention to all currencies (for this assignment apply 360 days in all calculations). Annual borrowing and investment rates for your company Country 3 month rates 6 months rates 9 month rates 12 month rates Borrow Invest Borrow Invest Borrow Invest Borrow Invest United 2.687% 2.713% 2.580% 2.740% 2.766% 2.633% 0.786% 0.747% 0.794% 0.755% 0.801% 0.762% 0.809% Europe 0.505X 0.510% 0.515% 0.520% 0.495% States 2.554% 2.607% Britain 0.770 0.480K 0.48SN 0.490% Bank applies 360 day-count convention to all currencies. Explanation -eg3 month borrowing rate on $ = 2.687%. This is the annual borrowing rate for 3 months. If you only borrow for 3 months the interest rate is actually 2.687X/4 = 0.67175% (always round to 5 decimals when you do calculations) Furthermore, note that these are the rates at which your company borrows and invests. The rates are not borrowing and investment rates from a bank perspective. Option prices: Currencies 3 month options 6 month options Call option Put option Call option Put option Strike Premium Strike Premium Strike Premium Strike Premium in $ ins in s in $ $/ $1.29262 $0 00383 13126 $0.00383 $130564 So 00381231875 50.00381 51.14409 9.003174 50.00174 91 19202 50.00171 $1.15702 9.2012 S/C Bank applies 360 day-count convention to all currencies. (Students also have to apply 360 days in all calculations). Option premium calculations should include time value calculations based on US$ annual borrowing interest rates for applicable time periods e.g. 3 month $ option premium is subject to 2.687%/4 interest rate.) a. Calculate the cost of money market hedges for the imports from France (Complete Table 3 on the separate answer sheet) b. Determine the option types that you will consider based on the exchange rate quotes provided by your bank. Remember we will long or short the base currencies (in this case study the currencies that are not $) and the FV of premium cost is based on the borrowing cost of for the time period of the option. For example if it is a 3 month option, then the interest rate that should be applied is United States 3 month borrowing rate of 2.687%/4 = 0.67175%). Calculate the total cost of using options as hedging instrument for the imports from France (Complete Table 4 on the separate answer sheet). c. Compare the forward quotes, money market hedges and options with each other to determine the best exchange rate hedges for France (Complete Table 5 on the separate answer sheet). d. Calculate the exchange rates that will apply if the money market hedges are used for the exports to Britain (Complete Table 6 on the separate answer sheet) e. Compare the forward quotes and money market hedges with each other to determine the best exchange rate hedges for Britain (Complete Table 7 on the separate answer sheet). f. Assume you entered into the forward hedge for the import from France. Two months have passed since you entered into the hedge. Interest rates are the same as before. The spot exchange rate of the $/ is now 1.14720. Calculate the value of your forward position. Please use a 360 day count convention, since the bank also used a 360 day count convention with the forward quotes provided to you. Also remember for interest rates use risk free rates provided under scenario 1. Show your calculation in table 8 on the separate answer sheet. Table 3: France import cost with money market hedge: (8 marks) PV of foreign Converted at spot to Exchange rate currency to be $ and to be locked in with invested borrowed $ amount to be repaid after period transaction Show answers PV of foreign currency workings in the Exchange rate 2.500.000 Amount to be repaid Spot columns below locked in with (1404304 ( 1AOW 43 pan 000 transaction the answers 2,500,000 - 2,497,008.97. (1+0.400 S, (1 + lus) US$ 2.6.a.73 (1 +0.480%) 12 1.14134 = US$ 2,849,936.22. (1 + 2.687%)/12- = 2.497,008.97 US$ 2,849,936.22 US$ 2,868,890.73 = US$ 1.14756/ and your 2.500.000 . 2.500.000 Page 2 of 5 Check Table 4: France import cost with option hedge: (8 marks) Type of option (Call Total premium cost for or put?) import Total cost of option in $ (Strike plus premium) Show your answers and workings in the columns below the answers Call on France (Strike price x total Euro S premium x total Euro value value of import) + total of import X (1+1) premium (50.00383/ * 2,500,000) ($1.29962/E x 2,500,000) (1 +2.687%) = $9,832.28025 + $9,832.28025 $3,258,882.28 Option hedge breakeven exchange rate Total cost of option in $/ Total Euro value of transaction USS Europe $3,258,882.28 2,500,000 $1.303553/