Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Business Economics Expert

You are a financial adviser to a U.S. corporation that expects to receive a payment of 40 million Japanese yen in 180 days for goods exported to Japan. The current spot rate is 0.01 US dollars per Yen, so it takes .01 US dollars to buy one Yen. You are concerned that the U.S. dollar is going to appreciate against the yen over the next six months.

a) Assuming that the exchange rate remains unchanged, how much does your firm expect to receive in U.S. dollars?

b) How much would your firm receive (in U.S. dollars) if the dollar appreciated to 0.009 US dollars per Yen?

You could use a PUT options contract to protect your company against the risk of losses associated with the potential appreciation in the U.S. dollar. In your answer, assume that the current spot rate is 0.01 US dollars per Yen, and that the future rate is expected to be 0.009 US dollars per Yen. Your striking price is 0.0095 US dollars per Yen.

c) If the premium is $.0003 per yen (or .0003 dollars per yen), what is the total cost of the Put option contract?

d) If the spot rate in 180 days is .0097, do you exercise the option or let it expire?

i) Illustrate what was your dollar gain or loss from holding the option contract?

e) If the spot rate in 180 days is 0.009 US dollars per Yen as you predicted, do you exercise the option or let it expire?

i)What is the net gain or loss from the contract (measured in dollars)?

 

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M921609

Have any Question? 


Related Questions in Business Economics

1 there is a small country whose domestic demand and supply

1) There is a small country whose domestic demand and supply for a good x are given below (where P is the price of X) [drawing a demand and supply graph may be helpful to you, but is not required.] D: P=100-Q S: P=10+2Q ...

1what is the production possibilities curve and how is it

1. What is the production possibilities curve and how is it useful? 2. What 4 factors contribute to determining any point in this model? 3. How would we apply this framework to the real world? 4. You are planning to expa ...

Chapter 1 managing changeq1 figure 176 shows how bad an

Chapter 1 Managing change Q1 Figure 1.76 shows how bad an implementation can become. Action needs to be taken to prevent this kind of situation. What would you recommend should be done? Q2 You are the project manager for ...

Allocation and allotments please respond to the following1

"Allocation and Allotments" Please respond to the following: 1. From the first e-Activity, examine and evaluate the disparity of Georgia budget allocation for education and property tax to the various localities. Based o ...

What is the relationship between economy business and

What is the relationship between economy, business, and society? -6 page essay (includes only ONE page for references,but the cover page is not included in the 6 page requirement) -Double spaced -APA format

Assignmentyou must submit 2 files to this link once done as

Assignment You must submit 2 files to this link once done as follows: Part 1) An MS Excel spreadsheet (.xls or .xlsx no other file formats will be accepted) use the dataset spreadsheet provided for the assignment and inc ...

Assignmentpart idirections please write a paper that is at

Assignment PART I Directions: Please write a paper that is at least two to three pages in length in which you address the questions below. Write your paper in APA format with at least one cited scholarly reference. Revie ...

Assignmentmoral and ethical requirements should serve as

Assignment Moral and ethical requirements should serve as drivers which encourage a business to invest in or spend money on cybersecurity products, services, and programs. You have been invited to participate in a "light ...

In the united states as in most countries we value the

In the United States, as in most countries, we value the benefits of a free and competitive market. This suggests an interesting question: what if there were to be no Antitrust laws or other regulations on business activ ...

Free trade and restricted trade - benefits and cost1-2

Free Trade and Restricted Trade - Benefits and Cost 1-2 paragraphs APA format/ no plagarism Using your own words, define both free and restricted trade. What do you feel are the benefits and the cost to having free trade ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro