Remaining Time: 41 minutes, 40 seconds Question Completion Status Click Submit to complete this assessment Question 7 of 7 Question 7 30 points Save Answer Transaction Exposure - 30 minutes Central Venue Transit Inc. (CVT) has just signed a contract to purchase light rail cars from a manufacturer in Germany for euro 3.000.000 The purchase was made in June with payment due six months later in December. Because this is a sizable contract for the firm and because the contract is in etros rather than dollars, CVT is considering several hedging alternatives to reduce the exchange rate risk arising from the sale. To help the firm make a hedging decision you have gathered the following information The spot exchange rate is SI 250 euro The six month forward rate is $1.22 euro CVT's cost of capital is 11" The Euro zone 6-month borrowing tate is 99 The Euro zone 6-month lavesmeat rate is 7% The U.S. 6-month borrowing rate is 89 The US. 6-month Invement rate is 6% December call options for euro: strike price SI 28 euro premium price is 1.595 December put options for euro: strike S1 27 euro, premium price is 13 CVT's forecast for 6-mooth spot rates is S1 27 euang a how em CVT hedge its transaction exposure in the forward market? What is the required amount in dollars to pay off the accounts payable in 6 months will be? 15 points) 9 l p| Type here to search Remaining Time: 41 minutes, 40 seconds Question Completion Status Click Submit to complete this assessment Question 7 of 7 Question 7 30 points Save Answer Transaction Exposure - 30 minutes Central Venue Transit Inc. (CVT) has just signed a contract to purchase light rail cars from a manufacturer in Germany for euro 3.000.000 The purchase was made in June with payment due six months later in December. Because this is a sizable contract for the firm and because the contract is in etros rather than dollars, CVT is considering several hedging alternatives to reduce the exchange rate risk arising from the sale. To help the firm make a hedging decision you have gathered the following information The spot exchange rate is SI 250 euro The six month forward rate is $1.22 euro CVT's cost of capital is 11" The Euro zone 6-month borrowing tate is 99 The Euro zone 6-month lavesmeat rate is 7% The U.S. 6-month borrowing rate is 89 The US. 6-month Invement rate is 6% December call options for euro: strike price SI 28 euro premium price is 1.595 December put options for euro: strike S1 27 euro, premium price is 13 CVT's forecast for 6-mooth spot rates is S1 27 euang a how em CVT hedge its transaction exposure in the forward market? What is the required amount in dollars to pay off the accounts payable in 6 months will be? 15 points) 9 l p| Type here to search