Asis company provides the following information and you

Reference no: EM13396995

ASIS Company provides the following information and you need to make one recommendation to CEO regarding the AR and AP. Hedging Transaction Exposure Information Set Borrowing Rate Deposit Rate Euro 8% 3% USA 9% 4%

•Current Spot Rate: $1.25 • Forward Rate: $1.25 • Put Option (X= 1.26. P= $.01) Call Option (X= 1.25, P= $.01)

Future Spot Probability 1.15 10% 1.20 20% 1.25 20% 1.26 20% 1.27 20% 1.30 10%

Company has a receivable in euro for the amount of 11,000,000 euro in one year. You are trying to hedge this receivable using the techniques. Answer the following questions using the information set given above.

1. What is the probability that forward hedge outperforms the Money Market Hedge? Answer:_________

2. What is the probability that forward hedge outperforms no hedge? a. Answer:____________________

3. What is the probability that Money market hedge outperform the option hedge? a. Answer: _________

4. What is your recommendation to this receivable? Justify. (I want the expected value of all)

Reference no: EM13396995

Questions Cloud

Your report must include a reference list all research : select a global company of your choice in the service industry. using your selected global company as the subject

What is the average daily disbursement floathow much : no more pencils inc. disburses checks every two weeks that average 93000 and take seven days to clear. ignore the

What happens to money supply interest rates and economy if : what happens to the money supply interest rates and the economy if the federal reserve is a net seller of government

When lady gaga released her album ldquoborn this wayrdquo : a shopperrsquos grocery cart contains the following group of products baby powder wet wipes and diapers. what product

Asis company provides the following information and you : asis company provides the following information and you need to make one recommendation to ceo regarding the ar and ap.

What is the difference between contractionary and : what is the difference between contractionary and expansionary monetary policy? what is the intention of each policy

Determine the most important five skills that a forensic : using the wileyplus resources go to the ldquoforensic accountants fraud bustersrdquo example. nbsp1.determine the most

Make a chronological list of the investments cash flows : on january 2 20x1 bruce greene invested 10000 in the stock market and purchased 500 shares of heartland development

Write the uses of money how do commercial banks and federal : what are the uses of money? how do commercial banks and federal banks create money? is monetary policy conducted

User Account

All Pages