14LMN. entereda forward contract to hedge a ¥100,000,000 which the company expect3to pay in 90 days. The contract calls for LMN. to deliver yen (¥) at ¥111.25 per U.S.dollar. If on the delivery date, the spot rate is ¥109.75 per U.S. dollar. How much ia thegain (loss) on the hedge?*$12,205.33($12,.205.33)S66.666.67(కరర,6ం6 67Which of the following statementa is true? [S1]na strong form efficient market, thereis no mispriced assets. [S2] In a strong form efficient market, all information is equallyaveilable to allirvestorsBoth staterments 1 and 2.Staterment 2onlyStatement.1 onlyNeither of Staterment 1nor2.XYZ Inc io prepaning to iasue preferred atock The preferred stock wili nave a P100

Since you have asked multiple questions, we will solve the first question for you. If you want any…

EN LMN. entereda forward contract to hedge a ¥100,000,000 which the company expecta to pay in 90 days. The contract calls for LMN. to deliver yen (¥) at ¥111.25 per U.S. dollar. If on the delivery date, the spot rate is ¥109.75 per U.S. dollar. How much is the gain (loss) on the hedge? * $12,205.23 ($12.205 33) $66,666 67 ($66,666.67) Which of the following statementa is true? (S1]In a strong form efficient market, there is no mispriced aasets. [S2] In a strong form efficient market, all information is equally available to all investors. Both staterments 1 and 2. Statement 2 only. Statement 1 only. Neither of Staternent 1 nor 2

EN LMN. entereda forward contract to hedge a ¥100,000,000 which the company expecta to pay in 90 days. The contract calls for LMN. to deliver yen (¥) at ¥111.25 per U.S. dollar. If on the delivery date, the spot rate is ¥109.75 per U.S. dollar. How much is the gain (loss) on the hedge? * $12,205.23 ($12.205 33) $66,666 67 ($66,666.67) Which of the following statementa is true? (S1]In a strong form efficient market, there is no mispriced aasets. [S2] In a strong form efficient market, all information is equally available to all investors. Both staterments 1 and 2. Statement 2 only. Statement 1 only. Neither of Staternent 1 nor 2

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter11: Managing Transaction Exposure

Section: Chapter Questions

Problem 6ST

See similar textbooks

Similar questions

ABC Co. entered a forward contract to hedge a ¥100,000,000 which the company expects to pay in 90 days. The contract calls for ABC Co. to deliver yen (¥) at ¥111.25 per U.S. dollar. If on the delivery date, the spot rate is ¥109.75 per U.S. dollar. How much is the gain (loss) on the hedge? $12,285.33 ($12,285.33) $66,666.67 ($66,666.67)
A U.S. Company knows that it will have to pay 3 million Euros in three months. The currentexchange rate is 1.4500 USD per euro. Discuss how forward and options contracts can beused by the company to hedge its exposure
An investment manager based in Germany hedges a portfolio of UK gilts with a 3-month forward contract. The current spot rate is GBP0.833/EUR and the 90-day forward rate is GBP0.856/EUR. At the end of 3 months, the gilts have risen in value by -2.50% (in GBP terms), and the spot rate is now GBP0.82/EUR. What was the true cost of the forward contract? a. 17.287% annualised. b. 14.787% annualised. c. 7.287% annualised. d. 11.044% annualised.
Q17. October 20, 2020, Corporation D entered a contract to receive two million Argentine pesos on January 20, 2021, for $100,000 based on a $1 per exchange rate futures contract (three months). 20 Argentine pesos. (Why would D Corporation get this contract? A) Corporation D believes that the value of the Argentine peso will increase at the same rate as the dollar B) Corporation D believes that Argentine's economy will grow at a lower rate than that of the United States. C) You could be protecting yourself from a future need to make a payment in Mexican pesos D) Corporation D believes that the value of the Argentine peso will decrease relative to the dollar.
A U.S. firm has a £100,000 payable with a 3-month maturity. To hedge the payable, it will take a short position in a forward contract True or False?
ss. Suppose you take a short position in 15-Russian ruble contracts at a price of $0.010125/RUB on the CME (Ruble contract consists of 2,500,000 rubles). Prices over the next two days are $0.010055/RUB and $0.009920/RUB. If your initial performance margin was $110,000, what is its value after two days of marking-to-market?
Suppose a German importer owes an Australian exporting company 150,000 AUD, due in three months. What is the expected value of payables in AUD under hedge?
47-An Omani trader expects to receive USD 500,000 in one month. The current spot rate for US dollars against OMR is $2.8000 = 1 OMR and the one- month forward rate is quoted as $2.6000 = 1 OMR. If Omani trader uses a forward exchange contract, how much will be received in OMR? O a. OMR 195,694.7162 O b. OMR 192,307.6923 O c. OMR 200,000 O d. None of the options
ABC Inc. has 10,000,000 Yen worth of receivables it expects to collect in 3 months’ time. To hedge its currency risk, it decided to hedge with a forward contract at a forward exchange rate of 100 Yen/US$. In 3 months’ time, the exchange rate is 105 Yen/US$. How much does ABC Inc. receive?
Assume that you are running an Australia based company which has an account payable of EUR 125,000 due in three months. You decide to hedge out the associated foreign exchange risk using futures contracts. A futures contract of EUR125,000 is selling at A$1.5410 per euro. Suppose the next three days’ settlement prices are A$1.5399, A$1.5480, and A$1.5410. The initial margin of your performance bond account is $2,000 and maintenance margin is $1,500. What is your margin account balance at the end of the first day and what is the balance of this account at the end of the third day?
Q4 An analyst holds a set of forward contracts on euro, against usd (=hc). Compute the fair value of the contracts.(a) Purchased: eur 1m 60 days (remaining). Historic rate: 1.350; current rate for same date: 1.500; risk-free rates (simple per annum): 3% in usd, 4% in euro. (b) Purchased: eur 2.5m 75 days (remaining). Historic rate: 1.300; current spot rate: 1.5025; risk-free rates (simple per annum): 3% in usd, 4% in euro. (c) Sold: eur 0.75m 180 days (remaining). Historic rate: 1.400; current rate for same date: 1.495; risk-free rates (simple per annum): 3% in usd, 4% in euro.
Assume that Stevens Point Co. has net payables of 200,000 Singapore dollars in 90 days. The spot rate of the S$ is US$0.71/1S$, and the Singapore periodic interest rate is 1.5% over 90 days (annual rate is 6% per year, so periodic rate is 1.5% per 90 days). Assume US periodic interest rates of 1% over 90 days or (annual rate is 4%, so periodic rate is 1% per 90 days). If the U.S. firm could implement a money market hedge, what is the cost of the payables in US dollars in 90 days using a money market hedge? Assume borrowing and lending rates are the same for simplicity. Be precise.