Your company is about to sell equipment to a British buyer for GBP 1,500,000 to be...
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Your company is about to sell equipment to a British buyer for GBP 1,500,000 to be received in 90 days. The following data are relevant: Spot exchange rate 1.7689 USD/GBP 90 day forward rate 1.7602 USD/GBP Expected spot rate in 90 days 1.770 USD/GBP WACC for your company is 10% 90 day pound deposit rate 8.0% p.a. 90 day pound borrowing rate 14.0% p.a. 90 day dollar deposit rate 6.0% p.a. 90 day dollar borrowing rate 8.0% p.a. June put option in OTC market for 1,500,000 GBP; strike price 1.76 USD: 1.5% premium If you perform a money market hedge, what is the amount of money you need to borrow in USD? (use 2 decimals and no commas for thousands) Answer: If you perform a forward/futures hedge, the accounting loss of the hedge is in USD: Answer: If you perform an options hedge, the cost of the option in 3 months' time is in USD (use 2 decimals and no commas): Answer: Your company is about to sell equipment to a British buyer for GBP 1,500,000 to be received in 90 days. The following data are relevant: Spot exchange rate 1.7689 USD/GBP 90 day forward rate 1.7602 USD/GBP Expected spot rate in 90 days 1.770 USD/GBP WACC for your company is 10% 90 day pound deposit rate 8.0% p.a. 90 day pound borrowing rate 14.0% p.a. 90 day dollar deposit rate 6.0% p.a. 90 day dollar borrowing rate 8.0% p.a. June put option in OTC market for 1,500,000 GBP; strike price 1.76 USD: 1.5% premium If you perform a money market hedge, what is the amount of money you need to borrow in USD? (use 2 decimals and no commas for thousands) Answer: If you perform a forward/futures hedge, the accounting loss of the hedge is in USD: Answer: If you perform an options hedge, the cost of the option in 3 months' time is in USD (use 2 decimals and no commas): Answer:
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