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As a US importer, we have the option of hedging with forwards, options, or not hedging. The size of the transaction is 6.04 million British Pounds.  There are 62,500 pounds in 1 option contract.                         Now                            End Spot                 1.240-41 $/L               1.100-01 $/L Forward          1.230-31 $/L               Call                  .04$                             0 Put                   .03$                             .14    How much would you receive/pay if you had hedged with forwards?

As a US importer, we have the option of hedging with forwards, options, or not hedging. The size of the transaction is 6.04 million British Pounds.  There are 62,500 pounds in 1 option contract.                         Now                            End Spot                 1.240-41 $/L               1.100-01 $/L Forward          1.230-31 $/L               Call                  .04$                             0 Put                   .03$                             .14    How much would you receive/pay if you had hedged with forwards?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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As a US importer, we have the option of hedging with forwards, options, or not hedging. The size of the transaction is 6.04 million British Pounds.  There are 62,500 pounds in 1 option contract.

                        Now                            End

Spot                 1.240-41 $/L               1.100-01 $/L

Forward          1.230-31 $/L              

Call                  .04$                             0

Put                   .03$                             .14

 

 How much would you receive/pay if you had hedged with forwards?

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