)How would company ABC hedge a 200 million receivable? Which alternative would you pick?

B) How would company ABC hedge a 400 million payable? Which alternative would you pick?

Spot rate - $2/

3 month Forward rate - $1.98/

3 month U.K. (U.S.) interest rate - 4% (3%) per year.

3 month put contract with a strike price of $1.99/ with a 4% premium

3 month call option with a strike price of $1.99/ with a 3.5% premium

 

Answer rating: 100% (QA)

A To hedge a 200 million receivable company ABC has the following alternatives 1 Sell the 200 million receivable at the spot rate 2 200000000 x 2 4000... View the full answer