Reference no: EM131069932
Problem 1: On July 1, an American auto dealer enters into a contract to purchase 20 British sports cars with payment to be made on November 1. Each car will cost 35,000 pounds. The dealer decides to conduct a long hedge with currency futures based on the following quotes on July 1:
Current exchange rate: $1.6190/£
December pound futures contract price: $1.5780/£
One pound futures contract:£62,500
Suppose that, on November 1, the spot rate is $1.7420/£ and the December pound futures contract price is $1.7375/£.
Questions:
1. If the dealer closes his position on November 1, will he make a profit or loss? How much is it?
2. How much does the dealer effectively pay for the 20 cars?
Problem 2: Fresno Corporation will need £343,800 in 180 days to pay for shipments of British components to its US-based assembly plant. The firm decides to take a hedge with a call option. Financial market data are as follows:
Spot rate of pounding sterling:$1.50/£
Premium on a 180-day call option at $1.6720/£:$0.02/£
Standard value per contract:£31,250
Questions:
1. How many contracts does Fresno have to purchase?
2. What is the total premium it has to pay?
3. If the spot rate at maturity is $1.6560/£, should Fresno exercise the option? Why or why not?
4. Suppose the spot rate at maturity is $1.6900/£ and Fresno exercises its option. What is the total amount that the firm pays for the £343,800? How much would it pay if it did not buy a call option?
|
Difference between fifo and lifo
: The difference between FIFO and LIFO is FIFO refers to the practice of firms, when making sales, assuming that the inventory that came in last (at a higher price) is being sold first. LIFO implies that a firm is selling the lower cost, older inven..
|
|
Discuss how communication builds identity
: Define identity and discuss how communication builds identity
|
|
Two organic composites are made with the same matrix
: The spatial distribution of the fibers in the matrix, however, is different for the two cases. If crazing occurs in the polymeric matrix of the two composites, would you expect the monotonic and cyclic stress-strain response to be different for th..
|
|
Preferrred stock dividends-common dividends
: A company reports a retained earnings balance of $3,000 for 2009. In 2008 the balance was $2,500. Between those years they paid $100 in preferrred stock dividends and $200 in common dividends. Given that information, what must have been their net..
|
|
Pay for shipments of british components
: Fresno Corporation will need £343,800 in 180 days to pay for shipments of British components to its US-based assembly plant. The firm decides to take a hedge with a call option. Financial market data are as follows:
|
|
Create a manual for families
: Create a manual for families who have a family member with a psychiatric diagnosis - Do you have any tips of what should be included in the manual or any recommendations?
|
|
Develop a verilog hdl design of the circuit provided
: Develop a Verilog HDL design of the circuit provided in figure. Show your HDL code as well as the simulation results.
|
|
Describe at least two domains of human development
: Identify and describe at least two domains of human development - Describe the cultural and historical perspectives of the chosen topic, demonstrating an understanding of how the topic has been perceived over time and by other cultures. Provide rel..
|
|
Describe some of the short-term investment vehicles
: Describe some of the short-term investment vehicles that you use to manage your cash resources. Why did you elect these vehicles over the alternatives? What are their primary advantages and disadvantages?
|