(d) Your firm, a Singapore company, imports electronic products from America. Your firm has purchased USD 1 million worth of products and is to pay in one month's time. The current spot rate is SGD1.40/USD. (i) (ii) (iii) Will your company be concerned about an appreciation or depreciation in the USD? Explain your answer. Your firm is considering purchasing an option to hedge the risk of the USD movements against the SGD. Should your firm purchase a USD call or put option? Justify your answer. The option your firm purchased has a strike price of SGD1.41/USD. Given that the spot rate in one month's time is SGD1.42/USD, should your firm exercise the option? Explain your reason(s).

Cray Research sold a supercomputer to the Max Planck Institute in Germany on credit and invoiced €11.00 million payable in six months. Currently, the six-month forward exchange rate is $1.15 per euro and the foreign exchange adviser for Cray Research predicts that the spot rate is likely to be $1.10 per euro in six months. Required: a. What is the expected gain/loss from a forward hedge? Note: A Negative value should be indicated with a minus sign. Do not round intermediate calculations. Round your final answer in whole dollars not in millions. b. If you were the financial manager of Cray Research, would you recommend hedging this euro receivable? c. Suppose the foreign exchange adviser predicts that the future spot rate will be the same as the forward exchange rate quoted today. Would you recommend hedging in this case? d. Suppose now that the future spot exchange rate is forecast to be $1.22 per euro. Would you recommend hedging? a. b. Would you recommend hedging this euro…

10. Suppose that Baltimore Machinery sold a drilling machine to a Swiss firm and gave the Swiss client a choice of paying either $10,000 or SF 15,000 in three months. (a) In the above example, Baltimore Machinery effectively gave the Swiss client a free option to buy up to $10,000 dollars using Swiss franc. What is the 'implied' exercise exchange rate? (b) If the spot exchange rate turns out to be $0.62/SF, which currency do you think the Swiss client will choose to use for payment? What is the value of this free option for the Swiss client? (c) What is the best way for Baltimore Machinery to deal with the exchange exposure?

(Transaction Exposure)Trident — A U.S.-based company, has concluded a sale of telecommunications equipment to Regency (U.K.). A total payment of £2,000,000 is due in 90 days.  Given the following exchange rates and interest rates,  the break-even investment rate (for money market hedge) is _________% when comparing the forward hedge and the money market hedge.     Assumptions   Value 90-day A/R in pounds   £2,000,000.00 Spot rate, US$ per pound ($/£)   $1.5610 90-day forward rate, US$ per pound ($/£)   $1.544 3-month U.S. dollar investment rate   14.000% 3-month U.S. dollar borrowing rate   12.000% 3-month UK investment interest rate   7.500% 3-month UK borrowing interest rate   10.000% Put options on the British pound: Strike rates, US$/pound ($/£)          Strike rate ($/£)   $1.55           Put option premium   1.2%      Strike rate ($/£)   $1.54           Put option premium   1.1%      Strike rate ($/£)   $1.55          Call option premium   2.1%…

(C) US Bank is considering investing in a three years' project in Europe country. The project would require an initial investment of $750,000 and it is expected to generate €80,000, €100,000 and €150,000 in year one until three, respectively. The business risk will be identical to the firm's existing line of business in the euro-zone, the required rate of return in the euro-zone is 18 percent. The exchange rate is $1.20/€ where the dollar also shows appreciating by one percent for every year. Determine the Net Present Value (NPV) in dollar currency for this project and justify.

Union Corp must make a single payment of €5 million in six months at the maturity of a payable to a French firm.  The finance manager expects the spot price   of the € to remain stable at the current rate of $1.60/€.  But as a precaution, the manager is concerned that the rate could rise as high as $1.70/€ or fall as low         as $1.50/€.  Because of this uncertainty, the manager recommends that Union Corp hedge the payment using either options or futures.  Six months Call and Put options with an exercise price of $1.60/€ are available.  The Call sells for $.08/€ and the Put sells for $.04/€.  A six month futures contract on € is trading at $1.60/€. Should the manager be worried about the dollar depreciating or appreciating? If Union Corp decides to hedge using options, should it buy Calls or Puts to hedge the payment?  Why? If futures are used to hedge, should the company buy or sell € futures? Why? What will be the net payment on the payable if an option contact was used?  assume…

Suppose you are working for a company based in Ireland (where the euro is used). This company exports product to the UK, but invoices its prices in euros (instead of pounds). Suppose you believe the euro will appreciate versus the pound over the coming year. Would that impact the profitability of your company this year? If not, explain. If so, explain how (and the type of risk you’re facing.

i need help with this problem i know the answer is 5.86 i just need help on how to do it step by step

1-) Assume that a U.S. based investor began applying a carry trade strategy by borrowing in the U.S. and investing in Turkey, as of December 2023. The corresponding interest rates are 3% in the U.S. and 40% in Turkey. The current spot rate between TL and USD is 29.2TL per USD. The strategy will be in place for a year, hence will end in December 2024. Note that the investor is taking an exchange rate risk here. If he decides to hedge some of that exchange rate risk via selling Turkish lira forward, what is the price range for the contract that is acceptable for her/him? 2-) Assume that a U.S.-based investor began applying a carry trade strategy by borrowing in the U.S. and investing in Turkey as of December 2023. The corresponding interest rates are 3% in the U.S. and 40% in Turkey. The current spot rate between TL and USD is 29.2TL per USD. The strategy will be in place for a year and will end in November 2023. Note that the investor is taking an exchange rate risk here. To hedge some…

Select each of the following strategies that can be used to hedge the foreign exchange risk of a British entity expecting to receive 1m INR in one year:   Group of answer choices   Borrowing GBP against the receivable, converting to INR, and investing the INR at Indian interest rates.   Entering a long position in a forward contract on the INR.   Entering a short position in a put on the INR.   Entering a long position in a put on the INR.   Borrowing INR against the receivable, converting to GBP, and investing the GBP at British interest rates.   Entering a short position in a forward on the INR.