Sing Tao wants to import goods for 2.12 million Australian dollar (A$) and pay to Australian exporter, WA Co., in one year. Sing Tao also wants to minimise its exchange rate risk for the payment of A$2.12 million by taking the money market hedging strategy. Calculate the Chinese yuan (CNY) costs using the money market hedging strategy based on the information in Table 1. (Enter the whole number without sign and symbol). TABLE 1 For Chinese yuan (CNY) Spot rate A$0.3213/CNY One-year forward rate A$0.2381/CNY One-year CNY deposit and borrowing rate 3.21% One-year call options Exercise price = A$0.31 Premium = A$0.02 One-year put options Exercise price = A$0.53 Premium = A$0.03 For Australian dollar (A$) Spot rate CNY3.4201/A$ One-year forward rate CNY1.213/A$ One-year A$ deposit and borrowing rate 2.31% One-year call options Exercise price = CNY2.34 Premium = CNY0.12 One-year put options Exercise price = CNY1.31 Premium = CNY0.12
Cost of Debt, Cost of Preferred Stock
This article deals with the estimation of the value of capital and its components. we'll find out how to estimate the value of debt, the value of preferred shares , and therefore the cost of common shares . we will also determine the way to compute the load of every cost of the capital component then they're going to estimate the general cost of capital. The cost of capital refers to the return rate that an organization gives to its investors. If an organization doesn’t provide enough return, economic process will decrease the costs of their stock and bonds to revive the balance. A firm’s long-run and short-run financial decisions are linked to every other by the assistance of the firm’s cost of capital.
Cost of Common Stock
Common stock is a type of security/instrument issued to Equity shareholders of the Company. These are commonly known as equity shares in India. It is also called ‘Common equity
Sing Tao wants to import goods for 2.12 million Australian dollar (A$) and pay to Australian exporter, WA Co., in one year. Sing Tao also wants to minimise its exchange rate risk for the payment of A$2.12 million by taking the
Calculate the Chinese yuan (CNY) costs using the money market hedging strategy based on the information in Table 1. (Enter the whole number without sign and symbol).
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TABLE 1 |
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For Chinese yuan (CNY) |
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Spot rate |
A$0.3213/CNY |
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One-year forward rate |
A$0.2381/CNY |
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One-year CNY deposit and borrowing rate |
3.21% |
|
One-year call options |
Exercise price = A$0.31 |
|
Premium = A$0.02 |
|
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One-year put options |
Exercise price = A$0.53 |
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Premium = A$0.03 |
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For Australian dollar (A$) |
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|
Spot rate |
CNY3.4201/A$ |
|
One-year forward rate |
CNY1.213/A$ |
|
One-year A$ deposit and borrowing rate |
2.31% |
|
One-year call options |
Exercise price = CNY2.34 |
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Premium = CNY0.12 |
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One-year put options |
Exercise price = CNY1.31 |
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Premium = CNY0.12 |
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