What is the amount received from the currency option hedge

Assignment Help Financial Management

Reference no: EM131949931

1. Determine the equivalent exchange rate to €.0671/MXN, with the MXN as the terms currency and the € as the base currency.

2. You invest in foreign stocks (Japanese Yen denominated stocks). General Electric is an international bond issuer (Japanese Yen denominated bonds). Generally speaking, if the Japanese Yen appreciates over time this will be __________ for you and ____________ for General Electric.

Good; Good

Good; Bad

Bad; Bad

Bad; Good

3. Last year, the USD depreciated 4% in nominal terms versus the MXN. inflation in the US was 3% and inflation in Mexico was 8%. In real terms, the USD depreciated approximately 9% (give or take 1%) relative to the MXN.

True or False

4. Mender Co. will be receiving 500,000 Australian dollars in 180 days. Currently, a 180-day call option with an exercise price of $.68 and a premium of $.02 is available. Also, a 180-day put option with an exercise price of $.66 and a premium of $.02 is available. Mender plans to purchase options to hedge its receivables position. Assuming that the spot rate in 180 days is $.67, what is the amount received from the currency option hedge (after considering the premium paid)?

Reference no: EM131949931

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