Dow Chemical has sold SFr 25 million in chemicals to Ciba-Geigy. Payment is due in 180 days.

Spot rate: $0.7957/SFr

180-day forward rate: $0.8095/SFr

180-day U. S. dollar interest rate (annualized): 5%

180-day Swiss franc interest rate (annualized): 2%

180-day call option at $0.80/SFr: 2% premium

180-day put option at $0.80/SFr: 1% premium

a. What is the hedged value of Dow’s receivable using the forward market hedge?

b. Explain how Dow can use the money market hedge?

c. Explain the use of currency options to hedge its receivable?

wheres the chart? so i can answer.

answer///supply is elastic, and demand is inelastic;

two years ago, when picking flowers in the mountains back of yosemite valley, i found a book. it was blotted and storm-beaten; all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however; many of the inner pages were well preserved. and although all were more or less stained and torn, whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today; its granite pages have been torn and blurred by the same storms that wasted the castaway book.

two years ago, when picking flowers in the mountains back of yosemite valley; i found a book. it was blotted and storm-beaten, all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however, many of the inner pages were well preserved. and although all were more or less stained and torn; whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today, its granite pages have been torn and blurred by the same storms that wasted the castaway book.