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problem: As treasurer of Tucson Corp. [A United State exporter to New Zealand], you must decide how to hedge [if at all] future receivables of 250,000 New Zealand 90 dollars days from now. Put options are available for a premium of dollars.03 per unit and an exercise price of dollars .49 per New Zealand dollar. The forecasted spot rate of the NZ$ in 90 days follows:

Future Spot Rate

Probability

$.44

30%

.40

50

.38

20

Given that you hedge your position with options, make a probability distribution for United State dollars to be received in 90 days.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M917800

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