I need assistance with this question. My professor has already given the correct answer with a very short walk through, but I was hoping you could explain how he got this information step by step so I can better understand the process.
Company Y has payables of 6,777,984 BRL in 9 months. The spot BRLUSD is 0.3032. Forecast indicates that the BRL could either end up with a value of $0.3045 (32% chance), a value of $0.3065 (54% chance) or a value of $0.3156 (14% chance). The US interest rates are: deposit 3.17% and borrowing 3.19% and the Brazilian rates are: deposit 3.31% and borrowing 3.37%. 9-month forwards on the BRL are priced for $0.3099. Put options with 9 months expiration and strike price of $ 0.3014 are available for a premium of USD $0.0016 and call options with 9 months expiration and strike price of $ 0.3152 are available for a premium of USD $0.0013.
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