Your us firm has a 100000 payable with a 3 month

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International Financial Management
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Chapter 20 / Exercise 3
International Financial Management
Madura
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67. Your U.S. firm has a 100,000 payable with a 3-month maturity. Which of the following will hedge your liability? A. Buy the present value of 100,000 today at the spot exchange rate, invest in the U.K. at iB. Buy a call option on 100,000 with a strike price in dollars.C. Take a long position in a forward contract on 100,000 with a 3-month maturity.D. All of the above.
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68. Your U.S. firm has a 100,000 payable with a 3-month maturity. Which of the following will hedge your liability?
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International Financial Management
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Chapter 20 / Exercise 3
International Financial Management
Madura
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Chapter 08 - Management of Transaction Exposure69. Suppose that the exchange rate is €1.25 = 1.00. Options (calls and puts) are available on the London exchange in units of €10,000 with strike prices of 0.80 = €1.00.Options (calls and puts) are available on the Frankfurt exchange in units of 10,000 with strike prices of €1.25 = 1.00.For a U.K. firm to hedge a €100,000 payable,
70. Suppose that the exchange rate is €1.25 = 1.00. Options (calls and puts) are available on the London exchange in units of €10,000 with strike prices of 0.80 = €1.00. Options (calls and puts) are available on the Frankfurt exchange in units of 10,000 with strike prices of €1.25 = 1.00. For a U.K. firm to hedge a €100,000 receivable,
71. Suppose that the exchange rate is €1.25 = 1.00. Options (calls and puts) are available on the Philadelphia exchange in units of €10,000 with strike prices of $1.60/€1.00.Options (calls and puts) are available on the Philadelphia exchange in units of 10,000 with strike prices of $2.00/1.00.For a U.S. firm to hedge a €100,000 payable, A. Buy 10 call options on the euro with a strike in dollars.B. Buy 8 put options on the pound with a strike in dollars.C. Sell 10 call options on the euro with a strike in dollars.D. Sell 8 put options on the pound with a strike in dollars.E. Both a) and b)F. Both c) and d)8-35
Chapter 08 - Management of Transaction Exposure

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