Question

f you are to receive SF in the future, you can hedge your FX risk by...

f you are to receive SF in the future, you can hedge your FX risk by

Group of answer choices

Borrowing SF, selling SF for $ in spot market, investing $

buying SF forward

none of the options

borrowing $, buying SF in spot market, investing in SF

Homework Answers

Answer #1

Money Market Hedge Steps:

1. Borrow in Foreign currency, whose maturity value is equal to Proceedings.

2. Convert the Loan procedds into Home Currency using spot Rate.

3. Deposit the loan proceeding in Home currency for specified period

4. Realize the Matuirty of deposit

5. Receive the foreign curreny, and clear the loan taken in foreign currency.

Hence Option A is correct.

Pls do rate, if the answer is correct and comment, if any further assistance is required.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
PLEASE SHOW WORK You plan to visit Geneva, Switzerland in three months to attend an international...
PLEASE SHOW WORK You plan to visit Geneva, Switzerland in three months to attend an international business conference. You expect to incur the total cost of SF 5,000 for lodging, meals and transportation during your stay. As of today, the spot exchange rate is $0.60/SF and the three-month forward rate is $0.63/SF. You can buy the three-month call option on SF with the exercise rate of $0.64/SF for the premium of $0.05 per SF. Assume that your expected future spot...
Assume there is a direct cross market for GBP/Sf. Assume the spot FX rates with the...
Assume there is a direct cross market for GBP/Sf. Assume the spot FX rates with the USD are 1.5 Sf/$ and 1.50 $/£. What should be the direct cross-rate be for Sf/£? If the direct cross-rate is 2.50 Sf/£, what three deals can you do to lock in a risk free profit on 1 unit of the base currency? Calculate the arbitrage profit.
The forward rate of the Swiss franc (SF) is $0.50. The spot rate of the Swiss...
The forward rate of the Swiss franc (SF) is $0.50. The spot rate of the Swiss franc is $0.48. The following interest rates exist: U.S. Switzerland 360-day borrowing rate 7% 5% 360-day deposit rate 6% 4% Kriner Inc. needs to purchase SF200,000 in 360 days. Determine the amount of U.S. dollars needed in 360 days if Kriner Inc. uses a money market hedge. Group of answer choices $96,914 $101,904 $101,923 $92,307 $98,770
You are the treasurer of Arizona Corporation and must decide how to hedge (if at all)...
You are the treasurer of Arizona Corporation and must decide how to hedge (if at all) future receivables of 350,000 Australian dollars (A$) 180 days from now. Put options are available for a premium of $0.02 per unit and an exercise price of $0.50 per Australian dollar. The forecasted spot rate of the Australian dollar in 180 days is: The 180-day forward rate of the Australian dollar is $0.50. What is the probability that the forward hedge will result in...
When a U.S.-based company has an accounts receivable of €100,000 due in three months,the company can...
When a U.S.-based company has an accounts receivable of €100,000 due in three months,the company can hedge this euro receivable by: a. buying a three-month put option on €100,000. b. buying a three-month call option on €100,000. c. buying €100,000 forward at a three-month $-€forward rate. d. borrowing U.S. dollars for three months, selling the dollars for euros spot, and then investing the euros for three months.
You plan to visit Geneva, Switzerland in three months to attend an international business conference. You...
You plan to visit Geneva, Switzerland in three months to attend an international business conference. You expect to incur the total cost of SF 10,000 for lodging, meals and transportation during your stay. As of today, the spot exchange rate is $0.60/SF and the three-month forward rate is $0.63/SF. You can buy the three-month call option on SF with the exercise rate of $0.64/SF for the premium of $0.05 per SF. Assume that your expected future spot exchange rate is...
A US importer scheduled to make a payment of €100 000 in 3 months can hedge...
A US importer scheduled to make a payment of €100 000 in 3 months can hedge his foreign exchange risk by a. purchasing $100 000 in the forward market for delivery in 3 months b. selling €100 000 in the spot market for delivery in 3 months c. purchasing €100 000 in the forward market for delivery in 3 months d. selling $100 000 in the spot market for delivery in 3 months
You plan to visit Geneva, Switzerland in three months to attend an international business conference. You...
You plan to visit Geneva, Switzerland in three months to attend an international business conference. You expect to incur a total cost of SF 5,000 for lodging, meals and transportation during your stay. As of today, the spot exchange rate is $0.60/SF and the three-month forward rate is $0.63/SF. You can buy a three-month call option on SF with the exercise rate of $0.66/SF for a premium of $0.13 per SF. Assume that your expected future spot exchange rate is...
You plan to visit one of your friends living in Colorado, America in three months. You...
You plan to visit one of your friends living in Colorado, America in three months. You expect to incur the total cost of US$20,000 for lodging, meals, and transportation during your stay. As of today, the spot exchange rate is RM_____/ US$ and the three-month forward rate is RM_____/ US$ (please refer to Table 1 below for your given rates). You can buy the three-month call option on US$ with the exercise rate of RM4.3/ US$ for the premium of...
Indiana Company expects to receive 5 million euros in one year from exports.It can use any...
Indiana Company expects to receive 5 million euros in one year from exports.It can use any one of the following strategies to deal with the exchange rate risk. Estimate the dollar cash flows received as a result of using the following strategies: a). unhedged strategy b). money market hedge c). option hedge The spot rate of the euro as of today is $1.30. Interest rate parity exists. Indiana Company uses the forward rate as a predictor of the future spot...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT