Required: a. Calculate your expected dollar cost of buying SF9,000 if you choose to hedge by a call option on SF. b. Calculate the future dollar cost of meeting this SF obligation if you decide to hedge using a forward contract. c. At what future spot exchange rate will you be indifferent between the forward and option market hedges?

Select all of the following statements that accurately compare or contrast forwards and options:   Group of answer choices   Taking naked long positions in either a call or forward will lead to an overall long position in the underlying security.   Options and forwards always have identical payoffs if the spot price remains the same.   Both options and forwards can be used to reduce exposure to foreign exchange risk.   Going long a naked put option and going short a naked forward both cause unlimited liability.   Both options and forwards require the payment of a premium at the initiation of the contract.   Forward contracts impose obligations on both parties in the transaction. Options contracts only impose an obligation on one party.

Assume a company needs to hedge payables. Which of the following conditions has to be met so a company would choose the options hedge? The break-even spot exchange rate is greater than the forward exchange rate. The break-even spot exchange rate is less than the forward exchange rate. The break-even spot exchange rate is less than the spot exchange rate. The break-even spot exchange rate is greater than the spot exchange rate.

Given the following information, predict the European call option's new price after the risk free rate changes. Initial call option price = $3 Initial risk free rate = 9.9% Rho = 9 New risk free rate = 9.5%   (required precision 0.01 +/- 0.01)   Greeks Reference Guide: Delta = ∂π/∂S Theta = ∂π/∂t Gamma = (∂2π)/(∂S2) Vega = ∂π/∂σ Rho = ∂π/∂r   Recall that rho is defined as the partial derivative of the option's price with respect to the risk free rate. (i.e. rho = ∂π / ∂r).