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Business, 22.07.2020 01:01 jonathankingsberry52

Redo the problem in the tutorial videos for Singapore Airline and Boeing. Now, instead of the contract currency in USD, it is in SGD. So, Boeing will have the risk since it will assume the exchange rate risk. (a) Assume the interest rates and spot rate are the same, show how Boeing can hedge with in the money market.
(b) Find the no arbitrage forward rate for USD/SGD and assumes Boeing enters into a forward position (would it go long or short?). What is Boeing’s gains/losses in one year if the spot rate turns out to be 0.7285 0r 0.7735?
(c) Suppose that there are one-year USD/SGD call options with strike price of $0.747 for $0.015 premium and put option with strike price of $0.747 for $0.018 premium. What option should Boeing buy? What’s Boeing’s gains/losses if the spot rate turns out to be $0.7285 or $0.7735 in one year?

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