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Corp. has futur one year. ket hedge Following information to make the decision. Verify your answer by determining the estimate (or probability distribution) of dollar revenue to be received in one year for each type of hedge. Spot rate of NZ$ One-year call option Money market hedge Total amount received is $ The money market hedge is -Select-to the option hedge. One-year put option One-year deposit rate. One-year borrowing rate Forecasted spot rate of NZ$ Do not round intermediate calculations. Round your answers to the nearest dollar. Option hedge $0.58 Exercise price = $0.51; premium $0.09 Exercise price = $0.54; premium $0.02 $0.51 $0.53 $0.56 U.S. 12% 15 RATE $0.51 0.53 0.56 NEW ZEALAND 7% $ $ 10 ROBABILITY 20% Possible Spot Rate Probability Total Amount Received 20% 50% 30% 50 30

Corp. has futur one year. ket hedge Following information to make the decision. Verify your answer by determining the estimate (or probability distribution) of dollar revenue to be received in one year for each type of hedge. Spot rate of NZ$ One-year call option Money market hedge Total amount received is $ The money market hedge is -Select-to the option hedge. One-year put option One-year deposit rate. One-year borrowing rate Forecasted spot rate of NZ$ Do not round intermediate calculations. Round your answers to the nearest dollar. Option hedge $0.58 Exercise price = $0.51; premium $0.09 Exercise price = $0.54; premium $0.02 $0.51 $0.53 $0.56 U.S. 12% 15 RATE $0.51 0.53 0.56 NEW ZEALAND 7% $ $ 10 ROBABILITY 20% Possible Spot Rate Probability Total Amount Received 20% 50% 30% 50 30

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
Problem 1PS
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Kl. 261.

SMU Corp. has future receivables of 6 million New Zealand dollars (NZ$) in one year. It must decide whether to use options or a money market hedge to hedge this position. Use any of the following information to make the decision. Verify your answer by determining the estimate (or probability distribution) of dollar revenue to be received in one year for each type of hedge. Money market hedge Total amount received is $ The money market hedge is Spot rate of NZ$ One-year call option Do not round intermediate calculations. Round your answers to the nearest dollar. Option hedge -Select- to the option hedge. One-year put option One-year deposit rate One-year borrowing rate Forecasted spot rate of NZ$ Possible Spot Rate $0.51 $0.53 $0.56 $0.58 Exercise price = $0.51; premium $0.09 Exercise price $0.54; premium $0.02 = U.S. 12% 15 RATE $0.51 0.53 0.56 $ LA NEW ZEALAND $ 7% Probability Total Amount Received 20% 50% 30% 10 ROBABILITY 20% 50 30
Transcribed Image Text:SMU Corp. has future receivables of 6 million New Zealand dollars (NZ$) in one year. It must decide whether to use options or a money market hedge to hedge this position. Use any of the following information to make the decision. Verify your answer by determining the estimate (or probability distribution) of dollar revenue to be received in one year for each type of hedge. Money market hedge Total amount received is $ The money market hedge is Spot rate of NZ$ One-year call option Do not round intermediate calculations. Round your answers to the nearest dollar. Option hedge -Select- to the option hedge. One-year put option One-year deposit rate One-year borrowing rate Forecasted spot rate of NZ$ Possible Spot Rate $0.51 $0.53 $0.56 $0.58 Exercise price = $0.51; premium $0.09 Exercise price $0.54; premium $0.02 = U.S. 12% 15 RATE $0.51 0.53 0.56 $ LA NEW ZEALAND $ 7% Probability Total Amount Received 20% 50% 30% 10 ROBABILITY 20% 50 30
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