subject
Business, 17.12.2019 06:31 nikki225

5. princess cruise company (pcc) purchased a ship from mitsubishi heavy industry. pcc owes mitsubishi heavy industry 500 million yen in one year. the current spot rate is 124 yen per dollar and the one-year forward rate is 110 yen per dollar. the annual interest rate is 5% in japan and 8% in the u. s. pcc can also buy a one-year call option on yen at the strike price of $.0081 per yen for a premium of .014 cents per yen. (a) compute the future dollar costs of meeting this obligation using the money market hedge and the forward hedges. (b) assuming that the forward exchange rate is the best predictor of the future spot rate, compute the expected future dollar cost of meeting this obligation when the option hedge is used. (c) at what future spot rate do you think pcc may be indifferent between the option and forward hedge? (hint: compute the highest possible cost of using the option hedging, and compare it with the cost of using the forward hedging.)

ansver
Answers: 1

Other questions on the subject: Business

image
Business, 22.06.2019 00:00, kyllow5644
Which of the following is a disadvantage to choosing a sole proprietorship business structure? question 9 options: the owner has personal responsibility for the company's liabilities. the owner has to share the profits with partners. the owner is still liable for personal debts. the owner has to report to shareholders.
Answers: 1
image
Business, 22.06.2019 09:50, winterblanco
phillips, inc. had the following financial data for the year ended december 31, 2019. cash $ 41,000 cash equivalents 75,000 long term investments 59,000 total current liabilities 149,000 what is the cash ratio as of december 31, 2019, for phillips, inc.? (round your answer to two decimal places.)
Answers: 3
image
Business, 22.06.2019 11:30, jacky852
On average, someone with a bachelor's degree is estimated to earn times more than someone with a high school diploma. a)1.2 b)1.4 c)1.6 d)1.8
Answers: 1
image
Business, 22.06.2019 20:10, Maria3737
Quick computing currently sells 12 million computer chips each year at a price of $19 per chip. it is about to introduce a new chip, and it forecasts annual sales of 22 million of these improved chips at a price of $24 each. however, demand for the old chip will decrease, and sales of the old chip are expected to fall to 6 million per year. the old chips cost $10 each to manufacture, and the new ones will cost $14 each. what is the proper cash flow to use to evaluate the present value of the introduction of the new chip? (enter your answer in millions.)
Answers: 1
You know the right answer?
5. princess cruise company (pcc) purchased a ship from mitsubishi heavy industry. pcc owes mitsubish...

Questions in other subjects: