Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. question 4 you will receive 500,000 in a few month

QUESTION 4 You will receive 500,000 in a few months and you calculate that the...

70.2K

Verified Solution

Question

Finance

image

QUESTION 4 You will receive 500,000 in a few months and you calculate that the break-even exchange rate for you between the "forward hedge (forward contract)" and "option hedge (option contract)" is $/ 1.78. Which of the following is more profitable for you if the spot rate is $/ 1.80? O Forward contract (forward hedging) Option contract (option hedging) O Both option contract and the forward contact provide the same profit O None QUESTION 5 Your company will receive 1,250,000 in four months. When you calculate that the break-even interest rate that makes you indifferent between money market hedge and "forward contract (forward hedge)" you find that it is 3%. If the interest rate is 3.5%, then forward contract (forward hedge) is more profitable for you than the money market hedge. True O False QUESTION 6 A US company needs to pay 750,000 to a British company in UK 6 months later. If this US company chooses the option hedge then the company needs to be a buyer of a put option O True O False

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students