Question: Trident-the same U.S.-based company discussed in this chapter, has concluded a second larger sale of telecommunications equipment to Regency (UK) Total payment of 2,000,000

Trident-the same U.S.-based company discussed in this chapter, has concluded a second larger sale of telecommunications equipment to Regency (UK) Total payment of 2,000,000 is due in 90 days. Given the following exchange rates and interest rates, how much is the dollar receipt of money market hedge at the end of 90 days? Assumptions Value 90-day A/R in pounds 2,000,000.00 Spot rate, USS per pound (S/E) $1.5610 $1.5421 90-day forward rate, USS per pound (S/E) 3-month U.S. dollar investment rate 3-month U.S. dollar borrowing rate. 4.000% 6.000% 3-month UK investment interest rate 4.500% 3-month UK borrowing interest rate 8.000% Put options on the British pound: Strike rates, USS/pound (5) ) Strike rate (S/E) $1.55 Put option premium 1,500% $1.54 Strike rate (S/E) Put option premium 1.000% $1.55 Strike rate (S/E) 2.500% Call option premium 9.000% Trident's WACC Maria Gonzalez's expected spot rate in 90 days, US$ per pound (S/E) $1.5431 Select one: a. $3,129,651.96 b. C. $3,156,731.77 $3,000,000.00 d. $3,145,068.97
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