How to Evaluate different hedging strategies? Airbus (European) sold an Airbus A400 to Delta Airlines (US)...
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How to Evaluate different hedging strategies? Airbus (European) sold an Airbus A400 to Delta Airlines (US) and billed $30,000,000 payable in six months (Delta to Airbus). Spot US Dollar/Euro 6mos U.S. Interest rate: 6-mos Euro Interest rate 6-mos forward rate US Dollar/Euro $1.05/ $1.10/ 3.0% per annum Put Option strike price of 0.95/$ 2.5% 0.02/$ Option Hedge vs Money Market Hedge At What future spot rate will Airbus be indifferent between option hedge and money market hedge? 1) 28,432,732 = S* $30,000,000 - 615,000 Result S 0.9683/S = Please show step-by-step calculations on how to get this result. Forward Hedge vs. Money Market Hedge At what future spot rate will Airbus be indifferent between forward hedge and money market hedge? 1) F*$30,000,000 28,432,732 Result F0.9478/S = Please show step-by-step calculations on how to get this result. Disp How to Evaluate different hedging strategies? Airbus (European) sold an Airbus A400 to Delta Airlines (US) and billed $30,000,000 payable in six months (Delta to Airbus). Spot US Dollar/Euro 6mos U.S. Interest rate: 6-mos Euro Interest rate 6-mos forward rate US Dollar/Euro $1.05/ $1.10/ 3.0% per annum Put Option strike price of 0.95/$ 2.5% 0.02/$ Option Hedge vs Money Market Hedge At What future spot rate will Airbus be indifferent between option hedge and money market hedge? 1) 28,432,732 = S* $30,000,000 - 615,000 Result S 0.9683/S = Please show step-by-step calculations on how to get this result. Forward Hedge vs. Money Market Hedge At what future spot rate will Airbus be indifferent between forward hedge and money market hedge? 1) F*$30,000,000 28,432,732 Result F0.9478/S = Please show step-by-step calculations on how to get this result. Disp
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