Euro-Japanese Yen. A French firm is expecting to receive *10.4 million in 90 days as a result of an export sale to a Japanese semiconductor firm. What will it cost, in total, to purchase an option to sell the yen at ?0.007000 ¥1.00? (See table for initial values.)The cost, in total, to purchase an option with a strike price of €0.007353 = ¥1.00 (knowing that its spot rate is €0.007000 ¥1.00) is €¥. (Round to the nearest cent.)Data table(Click on the following icon in order to copy its contents into a spreadsheet.)Domestic interest rate (% p.a.)Foreign interest rate (% p.a.)Volatility (% p.a.)rdA Japanese firm wishing to buyor sell euros (the foreign currency)VariableValue2.1870A European firm wishing to buyor sell yen (the foreign currency)VariableValue%rd0.0875 %rf0.0875%rf2.1870 %10.000%S10.000 %d1-0.39411d1-0.86248d2-0.44377d2-0.91214N(d1)0.34675N(d1)0.19421N(d2)0.32860N(d2)0.18085PrintDone- X

Here's a detailed explanation for better understanding. where:P is the price of the put optionQ is…

Answered: Euro-Japanese Yen. A French firm is…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter27: Multinational Financial Management

Section: Chapter Questions

Problem 7MC

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A Japanese exporter has a €1,000,000 receivable due in one year. To hedge the position, you will buy put options on euro True or False?
Suppose a European call option to buy 1 euro for 1.40 CAD costs 0.08 CAD. The option maturity is in two months and the forward exchange rate for the same maturity is 1.50 CAD per euro. What arbitrage opportunity exists? Explain how you can exploit this opportunity and how much the profit is. (Ignore the time value of money)
If the spot price of the euro is $1.10 per euro and the 30-day forward rate is believe that the spot rate in 30 days will be $1.05 per $1.00 per euro, and euro, then you can try to maximize speculative gains by buying euros in the current spot market and selling euros in 30 days at the future spot rate. you signing a forward foreign exchange contract to sell euros in 30 days. signing a forward foreign exchange contract to sell dollars in 30 days. buying dollars in the spot market and selling the dollars in 30 days at the future spot rate.
5. A U.S. firm expects a receivable (cash inflow) of €1,000,000 in six months. The current exchange rate is $1.125/€. Firm wants to sell euros in six months (to convert the inflow into dollars). Consider 3 possible spot prices in six months. 1. $1.195/€ 2. $1.100/€ 3. $1.025/€ What kind of option, put or call, is appropriate to hedge with? In each scenario, what is the total amount of the firm's NET receivable? NET receivable implies you should consider the receivable as well as the hedging costs of buying the option. (Assume an option exercise price of $1.130/€ and option premium of $.016/€) | 1. 2. 3.
The current spot exchange rate is USD 1.55 / EUR, and the 3-month forward rate is USD 1.50 / EUR. Based on your analysis of the exchange rate, you are confident that the spot exchange rate will be USD 1.62 / EUR in 3 months. You would like to buy or sell EUR 1 million. What should you do in order to speculate in the forward market?
Suppose that the exchange rate is $0.92/Euro. The dollar-denominatedinterest rate is 4% and the euro-denominated interest rate is 3%.u = 1.2, d = 0.9, T = 0.75, n = 3, and K = $1.00.a. What is the price of a 9-month European put?b. What is the price of a 9-month American put?
A Canadian supplier is offering two options to his American client to pay for an equipment: paying 13,000 Canadian dollars now or paying 10,000 US dollars in 6 months. If the annual interest rate for the Canadian dollar is 5% and for the US dollar is 8%, what is the "implied" exchange rate? Question 5 options: CAD0.7581/USD. CAD1.3520/USD. CAD0.7505/USD. CAD1.3190/USD. CAD1.3325/USD. CAD0.7396/USD.
Suppose you have developed a hairbrained scheme to purchase art, mint a NFT, and then sell it for a bubbly profit. For your scheme, you need to import USD 99570.85 worth of art into Australia. You are concerned that the exchange rate might move adversely during this time. Suppose the current exchange rate is 0.704 You see the following instruments available: • A Put option on AUD with a strike price (in USD/AUD) of 0.6 with a 1.3% premium • A Call option on AUD with a strike price (in USD/AUD) of 0.88 with a 1.7% premium • A forward rate agreement with a FRA rate of 3.5% • A customized forward forward arrangement of 4% Suppose you decide to hedge with the most relevant instrument. Assume that the USD/AUD exchange rate becomes 0.45. What is the overall cost of the art purchase in AUD, including any fees? O a. 163794.04825 O b. 113148.69318 O c. 165951.41667 O d. None of these options O e. 111225.16540 O f. Not enough information O g. 164656.99562
You have bid for a possible export order that would provide a cash inflow of €1 million in 6 months. The spot exchange rate is USD1.31 = EUR1, and the 1-year forward rate is USD1.29 = EUR1. There are two sources of uncertainty: (i) The euro could appreciate or depreciate, and (i) you may or may not receive the export order. Fill in the following table to illustrate in each case the profits or losses that you would make if you sell €1 million forward by filling in the following table. Assume that the exchange rate in 1 year will be either USD1.21 = EUR1 or USD1.41 = EUR1. (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers in millions rounded to 2 decimal places.) Total Profit/Loss (in millions) Spot Rate Receive Order Lose Order USD1.21 = EUR1 USD1.41 = EUR1
Suppose you, a German importer, expect to pay $1 million in 90 days for taking delivery of import goods from a U.S. exporter. St = $1.14/€; Ft, k = $1.16/€, where k =90 days. If St+k = $1.15/€, what would be the gain or loss from the forward hedge relative to remaining unhedged?
1.
A US based investor plans to invest $44,400 in Russia, where the interest rate is 6.65%. If the current exchange rate is $1 US buys 55 Rubles and the future expected exchange rate is $1 US buys 51.5 Rubles, then what is the future value of this investment? $50,570.7 $52,225.5 $52,990.0 O $54,040.4

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