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Due to your export to Thailand, you have an account receivable in six months from...

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Finance

Due to your export to Thailand, you have an account receivable in six months from today in the amount of 525.00 million in Thai Baht (TB)The data that you have compiled are below. In addition, you are told that for simplicity you should assume that the interest rate in each country is the same for borrowing or lending You would like to hedge the foreign exposure of this account. Thai Baht ( TB) is the currency of Thailand . Spot rate: TB 32.72/\$ Forward rate (six months): TB 34.30/\$ U.S. prime rate: 3.2 percent (borrowing or lending). Prime rate is an interest rate . Thailand interest rate: 6.0 percent (borrowing or lending) The firm borrows and invests at the market rates. Answer questions 1 through 6 based on the above information. If you buy a put option in the exact amount of the account at the strike price of TB 34.05 5 / d * o * l * l * a * r and you choose to exercise the option at the end of the six months, the outcome of this scenario is below. The cost of this option is $0.00014 per TB.

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