Suppose you anticipate receiving 18,000 pesos in 6 months. Upon receipt of the pesos, you will need to convert them to $. The current spot rate is 18'pesos/s. You are fairly certain that the peso will weaken relative to the $ over the next 6 months. You would like to hedge your forex risk, yet still benefit from any unanticipated change in the spot rate. To take advantage of any unexpected change, you shoul Oa. Buy a forward contract to convert pesos to $ at 18 pesos/s Ob. Buy a call option to buy $ at 18 pesos/S, then let the option expire if the peso strengthens unexpectedly. Oc Buy a put option to sell pesos at 18 pesos/s, then execute the option even if the peso strengthens unexpectedly Od. Simply do nothing and speculate
Suppose you anticipate receiving 18,000 pesos in 6 months. Upon receipt of the pesos, you will need to convert them to $. The current spot rate is 18'pesos/s. You are fairly certain that the peso will weaken relative to the $ over the next 6 months. You would like to hedge your forex risk, yet still benefit from any unanticipated change in the spot rate. To take advantage of any unexpected change, you shoul Oa. Buy a forward contract to convert pesos to $ at 18 pesos/s Ob. Buy a call option to buy $ at 18 pesos/S, then let the option expire if the peso strengthens unexpectedly. Oc Buy a put option to sell pesos at 18 pesos/s, then execute the option even if the peso strengthens unexpectedly Od. Simply do nothing and speculate
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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Transcribed Image Text:QUESTION 13
Suppose you anticipate receiving 18,000 pesos in 6 months. Upon receipt of the pesos, you will need to convert them to $. The current
spot rate is 18'pesos/$. You are fairly certain that the peso will weaken relative to the $ over the next 6 months. You would like to hedge
your forex risk, yet still benefit from any unanticipated change in the spat rate. To take advantage of any unexpected change, you should:
Oa. Buy a forward contract to convert pesos to $ at 18 pesos/s
Ob. Buy a call option to buy $ at 18 pesos/$, then let the optian expire if the peso strengthens unexpectedly.
Oc. Buy a put option to sell pesos at 18 pesos/S, then execute the option even if the peso strengthens unexpectedly.
Od. Simply do nothing and speculate
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