If OTI’s expectations of the 6-month spot exchange rate proves to be incorrect and the spot
exchange rate ends up at 0.87/€, what is the cost of the forward hedge to OTI?
Detail a potential money market hedge.
Assuming the 6-month spot exchange rate forecast of
OTI is correct, then what is the potential cost/profit of this hedge to OTI?
Detail a possible option hedge for OTI.
Assuming the 6-moth spot exchange rate forecast of
OTI is correct, then what would the cost of the option hedge be?