26 May Question · A U.S.-based MNC with exposure to the Swedish krona could best cross-hedge with Answer
Question
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| A U.S.-based MNC with exposure to the Swedish krona could best cross-hedge with
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· Question 2
3 out of 3 points
| Suppose that the exchange rate is €1.25 = £1.00. Options (calls and puts) are available on the Philadelphia exchange in units of €10,000 with strike prices of $1.60/€1.00. Options (calls and puts) are available on the Philadelphia exchange in units of £10,000 with strike prices of $2.00/£1.00. For a U.S. firm to hedge a €100,000 receivable, Answer |
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· Question 3
3 out of 3 points
| If you have a long position in a foreign currency, you can hedge with:
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· Question 4
3 out of 3 points
| An exporter can shift exchange rate risk to their customers by
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· Question 5
3 out of 3 points
| XYZ Corporation, located in the United States, has an accounts payable obligation of ¥750 million payable in one year to a bank in Tokyo. The current spot rate is ¥116/$1.00 and the one year forward rate is ¥109/$1.00. The annual interest rate is 3 percent in Japan and 6 percent in the United States. XYZ can also buy a one-year call option on yen at the strike price of $0.0086 per yen for a premium of 0.012 cent per yen. Assume that the forward rate is the best predictor of the future spot rate. The future dollar cost of meeting this obligation using the option hedge is
Answer |
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· Question 6
3 out of 3 points
| XYZ Corporation, located in the United States, has an accounts payable obligation of ¥750 million payable in one year to a bank in Tokyo. The current spot rate is ¥116/$1.00 and the one year forward rate is ¥109/$1.00. The annual interest rate is 3 percent in Japan and 6 percent in the United States. XYZ can also buy a one-year call option on yen at the strike price of $0.0086 per yen for a premium of 0.012 cent per yen. The future dollar cost of meeting this obligation using the forward hedge is
Answer |
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· Question 7
3 out of 3 points
| Suppose that Boeing Corporation exported a Boeing 747 to Lufthansa and billed €10 million payable in one year. The money market interest rates and foreign exchange rates are given as follows:
Assume that Boeing sells a currency forward contract of €10 million for delivery in one year, in exchange for a predetermined amount of U.S. dollar. Which of the following is (or are) true? (i) have to deliver €10 million to the bank (the counterparty of the forward contract) Answer |
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· Question 8
3 out of 3 points
| An exporter faced with exposure to a depreciating currency can reduce transaction exposure with a strategy of
Answer |
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· Question 9
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