Sololo Sloes has sold a home to the American First Family in Nairobi Karen area for...
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Sololo Sloes has sold a home to the American First Family in Nairobi Karen area for $12 milli months. The first family has requested for 3 months credit to compete due diligence and make the payment given: Interest rate USA 12%p.a Kenya 10%p.a Spot rate: $1/Kes. 76.22 - 92 3 month forward rate: $1/Kes. 64.23-93 There is a 3 month dollar call option at a premium of $25,000 to the exercised at $1/Kes.66.53. There is also a 3 month dollar put option at a discount of $10,000 to be exercised at $1/Kes.65.60 REQUIRED Using suitable computations illustrate three strategies available for Sololo slopes in managing this exposure and advice as the suitable strategy. Sololo Sloes has sold a home to the American First Family in Nairobi Karen area for $12 milli months. The first family has requested for 3 months credit to compete due diligence and make the payment given: Interest rate USA 12%p.a Kenya 10%p.a Spot rate: $1/Kes. 76.22 - 92 3 month forward rate: $1/Kes. 64.23-93 There is a 3 month dollar call option at a premium of $25,000 to the exercised at $1/Kes.66.53. There is also a 3 month dollar put option at a discount of $10,000 to be exercised at $1/Kes.65.60 REQUIRED Using suitable computations illustrate three strategies available for Sololo slopes in managing this exposure and advice as the suitable strategy.
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Answer rating: 100% (QA)
Strategy 1 Forward Contract The first option available for Sololo Sloes is to use a forward contract to manage their exposure A forward contract is a ... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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