You will receive NOK 80M in 1 year. What will be your revenue in USD if...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You will receive NOK 80M in 1 year. What will be your revenue in USD if you hedged with a FORWARD and the spot rate in 1 year is NOK 8.0000/USD? Round to the nearest dollar. Spot: NOK 8.0000/USD Forward: NOK 8.2000/USD 12-month USD Libor: +2.00% 12-month NOK Libor: +8.00% WACC: 10.00% Call option: strike price USD 0.125/NOK, premium USD 0.0025/NOK Put option: strike price USD 0.125/NOK, premium USD 0.0035/NOK Note: how to compute the call premium for NOK 100M: USD 0.0025/NOK * NOK 100,000,000 = USD 250,000 You will receive NOK 80M in 1 year. What will be your revenue in USD if you remain unhedged and the spot rate in 1 year is NOK 8.0000/USD? Round to the nearest USD. You will receive NOK 80M in 1 year. What will be your revenue in USD if you hedged with a FORWARD and the spot rate in 1 year is NOK 8.0000/USD? Round to the nearest dollar. Spot: NOK 8.0000/USD Forward: NOK 8.2000/USD 12-month USD Libor: +2.00% 12-month NOK Libor: +8.00% WACC: 10.00% Call option: strike price USD 0.125/NOK, premium USD 0.0025/NOK Put option: strike price USD 0.125/NOK, premium USD 0.0035/NOK Note: how to compute the call premium for NOK 100M: USD 0.0025/NOK * NOK 100,000,000 = USD 250,000 You will receive NOK 80M in 1 year. What will be your revenue in USD if you remain unhedged and the spot rate in 1 year is NOK 8.0000/USD? Round to the nearest USD.
Expert Answer:
Answer rating: 100% (QA)
Heres how to calculate your revenue in USD if you hedge with a forward and the spot rate in 1 year i... View the full answer
Related Book For
Managerial Economics
ISBN: 978-0133020267
7th edition
Authors: Paul Keat, Philip K Young, Steve Erfle
Posted Date:
Students also viewed these finance questions
-
13) George purchased a Swiss franc American call option against the U.S. dollar with a strike price of $1.29/CHF and a maturity of January. Assume that it is November and the spot rate is $1.20/CHF...
-
How is a statement of cash flows different from an income statement?
-
On December 21, 2014, Zurich Company provided you with the following information regarding its trading investments. Previous fair value adjustment balance -0- Fair value adjustment-Cr. $ (1,400)...
-
Determine the optimal-stage location for each feed and the number of theoretical stages required for the distillation separation shown in Figure 7.42 using the following equilibrium data in mole...
-
You build a solenoid containing 400 windings over a \(0.20-\mathrm{m}\) length, with a loop radius of \(0.025 \mathrm{~m}\) for each winding. If the current in the unit is \(3.0 \mathrm{~A}\), what...
-
Anderson Nuclear Power Plant will be mothballed at the end of its useful life (approximately 20 years) at great expense. The expense recognition principle requires that expenses be matched to...
-
6. An annular disk of mass M, inner radius a and outer radius b is placed on a horizontal surface with coefficient of friction , as shown in the figure. At some time, an impulse Jox is applied at a...
-
Zia Co. makes flowerpots from recycled plastic in two departments, Molding and Packaging. Zia uses the weighted average method, and units completed in the Molding department are transferred to the...
-
Delicious Gourmet Chocolates has two product lines, milk chocolate bars and chocolate covered almonds. The company is not doing as well as hoped as shown in the following income statement. Sales...
-
The volume of a cylinder is given by \(V=\pi r^{2} h\), where \(r\) is the radius of the cylinder and \(h\) is the height. Assume the radius, in \(\mathrm{cm}\), is lognormal with parameters...
-
Define "discovery." What is its purpose? What are the primary methods of discovery?
-
Identify five defenses to an annulment action.
-
True Or False Most Americans who are injured in an accident seek compensation from the individual or entity that caused the accident.
-
Explain why a party might choose to file a motion on an exparte basis. Give an example.
-
Suppose N(A) = 30. N(B) = 20, and N(An B) = 6 How many elements are in AUB? 45
-
When a company has a contract involving multiple performance obligations, how must the company recognize revenue?
-
Use the production matrix presented to answer the following questions. a. Determine the returns to scale for this matrix. (Start with one unit of X and one unit of Y.) b. Suppose the firm has a...
-
During the last 50 years or so, main studies of cost curves have been published. The results of two of these are summarized here. In each case, interpret the equation and discuss the shapes of the...
-
The owner of a car wash is trying to decide on the number of people to employ based on / the following short-run production function: Q = 6 L - 0.5L2 where Q = Number of car washes per hour L =...
-
First-Year College GPA Researchers at the College Board wanted to build a model that describes one's first-year college GPA. The researchers obtained the following model: \[\hat{y}=0.06 x_{1}+0.07...
-
Suppose we record the gender of the 15 students enrolled in an introductory statistics course as they enter the classroom. The males are denoted by a blue M and the females are denoted by a red...
-
A nutritionist wants to develop a model that describes the relation between the calories, total fat content, protein, sugar, and carbohydrates in cheeseburgers at fast-food restaurants. She obtains...
Study smarter with the SolutionInn App