Question 5, 9, 25 - Boeing Hedging Decisions

Context (Shared for All Parts): Boeing just signed a contract to sell a Boeing 737 aircraft to Air France. Air France will be billed ?50 million, payable in one year. The current spot exchange rate is $1.10/? and the one-year forward rate is $1.20/?. The annual interest rate is 5.0% in the U.S. and 2.0% in France. Boeing is concerned with the volatile exchange rate between the dollar and the euro and would like to hedge exchange exposure.

Question 25 Boeing just signed a contract to sell a Boeing 737 aircraft to Air France. Air France will be billed 501mi!Iion which is payable in one year. The current spot exchange rate is $1.1/ and the one-year forward rate is $1.20/. The annual interest rate is 5.0% in the U.S. and 2.0% in France. Boeing is concerned with the volatile exchange rate between the dollar and the euro and would like to hedge exchange exposure. If Boeing is considering two hedging alternatives: forward market hedging versus money market hedging. Which alternative would you recommend? O forward market hedging. (O money market hedging. O Insufficient information to make a recommendation. O indifferent between the two alternatives Question 5 4 pts Boeing just signed a contract to sell a Boeing 737 aircraft to Air France. Air France will be billed 50 million which is pot exchange rate is $1.1/ and the one-year forward rate is $1.20/. The annual France. Boeing is concerned with the volatile exchange rate between the payable in one year. The current s interest rate is 5.0% in the U.S. and 2.0% dollar and the euro and would like to hedge exchange exposure. at what forward exchange rate would Boeing be indifferent between the two hedging Other things being equal methods? B | Question 9 f RSP Boeing just signed a contract to sell a Boeing 737 aircraft to Air France. Air France will be billed 50 million which is ' payable in one year. The current spot exchange rate is $1.1/ and the one-year forward rate is $1.20/. The annual | interestrate is 5.0% in the U.S. and 2.0% in France. Boeing is concerned with the volatile exchange rate between the f dollar and the euro and would like to hedge exchange exposure. Now Boeing also considers the hedging by using the one-year put option on with the exercise rate of $1.05/ for the premium of $0.02 per . Assume that your expected future spot exchange rate is the same as the forward rate. What is your ranking order of the three alternatives from the most preferred to the least preferred? O option market, forward market, money market. s @ forward market, option market, money market (O money market, option market, forward market