Reference no: EM131264168
1. For each of the following examples, identify a position that should be held to hedge the scenario (you only need one).
a. Monita Inc. anticipates receiving 200,000 soles in six months from doing business in Peru.
b. K Corp believes the value of the euro will be extremely stable over the next year.
c. Jay LLC thinks the pound sterling will appreciate over the next three months.
d. Ken Vu has C$100,000 due in payables at the end of the month if services are rendered (the firm performing the services may go out of business).
2. Building on part a) of the previous question, assume that the spot rate of the Sol = $0.30 and the annual forward premium = 5%. The Sol depreciated by 8% over the last six months. If Monita hedged this transaction with a forward contract, what is the USD value of the 5200,000 receivables? What is the implied total gain or loss?
3. Building on part b) of question #1, assume that the spot rate of the euro = $1.10. Using the information below, pick ONE method to profit from the stability of the euro. Please indicate the NAME of your position and the payoff per unit if the euro appreciates by 1% over the course of the year? There are multiple correct answers. You only need to do ONE.
Strike Price
|
Call Premium
|
Put Premium
|
$1.05
|
$0.11
|
$0.03
|
$1.10
|
$0.06
|
$0.05
|
$1.15
|
$0.02
|
$0.09
|
1. Building on part c) of question #1, assume that the spot rate of the pound = $1.50 and the annual forward discount = -4%. Using this information, pick ONE method to profit from the appreciation of the pound. Please indicate the NAME of your position and the payoff per unit if the pound appreciates by 8% over the course of the three months? There are multiple correct answers. You only need to do ONE.
Strike Price
|
Call Premium
|
Put Premium
|
$1.40
|
$0.12
|
$0.03
|
$1.50
|
$0.04
|
$0.07
|
1. Building on part d) of question #1, assume that the spot rate of the C$ = $0.75 and the annual forward discount = -6%. Using this information, pick ONE method to hedge the payables in C$100,000 due at the end of the month. Please indicate the NAME of your position and the cost of the C$100,000 in USD. What if the Canadian Dollar appreciates by 4% over the course of one month? There are multiple correct answers. You only need to do ONE.
Strike Price
|
Call Premium
|
Put Premium
|
$0.70
|
$0.06
|
$0.01
|
$0.80
|
$0.02
|
$0.07
|
Interest and principal to be paid at maturity
: Innovate Company borrowed on a one-year, 10%, $150,000 note on May 1, 2014 with interest and principal to be paid at maturity. How much interest should Innovate Company report on its income statement for the year ending December 31, 2015?
|
Describe cost oriented pricing strategies
: Describe cost-oriented pricing strategies. - Why is it important for managers to understand the concept of break-even points? Are there any drawbacks?
|
Discuss the step response of the closedloop system
: Show that a PI feedback controller is undesirable because it results in a differentiator in the forward path. Discuss the step response of the closedloop system.
|
Create a conceptually rigorous text-rich chart
: MKT 650-01 Fall 2016 Take-home Exam. DIRECTIONS: Use the designated frameworks and cases to create a conceptually rigorous text-rich chart, or an analysis, as requested. Use as evidence/support only facts known by the relevant decision makers at t..
|
Identify position that should be held to hedge the scenario
: For each of the following examples, identify a position that should be held to hedge the scenario (you only need one). Monita Inc. anticipates receiving 200,000 soles in six months from doing business in Peru.
|
Develop a trivial console-based interactive question
: COS30016/HIT3037 Programming in Java - Develop a trivial console-based interactive question and answer (aka Multiple Choices Question - MCQ) application. This application allows users to create, manage and attempt multiple choice questions. The use..
|
How comfortable are you with naming your own price
: Demonstrate how the product life cycle, competition, distribution and promotion strategies, guaranteed price matching, customer demands, the Internet, and perceptions of quality can affect price.
|
Find the percentage overshoot
: an undamped natural frequency of 5 rad/s. Obtain the response due to a unit step, and find the percentage overshoot, the time to the first peak, and the steady-state error percentage due to a ramp input.
|
Profit for both years using the variable costing method
: The following information is available for Skipper Pools, a manufacturer of above-ground swimming pool kits: In its first year of operation, the company produced 12,290 units but was able to sell only 10,300 units. Find the profit for both years usin..
|