A describe the term ldquoswaprdquo and explain three main, Ask an Expert

Finance

a) Describe the term “swap” and explain three main types of swaps which you came across in the course.

b) Your company is based in the USA and has an account payable of 100 million Euros that is due in 3 month from now.

I. What is the risk exposure?

II. How would you hedge it with a future contract, assuming each contract size is 100,000 Euros?

c) GE stock is currently trading for $50 per share. A one-year European call option with a strike price of $55 is currently trading for $8.00. If the one-year risk-free interest rate is 5 %, what is the value of a one-year European put option on GE with a strike price of $55?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92727405

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