International Financial Management
14th Edition
ISBN: 9780357130698
Author: Madura
Publisher: Cengage
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An importer in Oman wants to exchange OMR to EUR which he will be Paying to an exporter after 3 months. He goes to a forex dealer in Oman who provides the following quotes for OMR/EUR
Spot rate =0.460727-927
3 months rate = 0.480827-997
How much OMR will the importer pay in to receive 75000 Euros after 3 months?
a.
All the options are wrong
b.
34569.53
c.
36062.03
d.
34554.53
e.
36074.78
An importer in Oman wants to exchange OMR to KWD to make payment to the exporter in Kuwait after 3 months. He goes to a forex dealer in Oman who provides the following quotes for OMR/KWD.
Spot rate =1.25695-6972
3 months rate = 1.32692-3642
How much OMR will the importer need to get KWD55000 after 3 months?
a.
123274.8
b.
All the options are wrong
c.
122125.5
d.
73503.1
e.
72980.6
Williams Corp. is considering signing contracts that will obligate the firm to purchase 100000 Swiss Francs worth of computer equipment at the end of each calendar quarter for the next 2 years. Williams is also signing a contract with a local high school that will purchase this equipment from Williams at a price of $87000 (U.S.) per quarter. What would Williams' profit or loss be over the life of the contract (8 quarters) if the "In US Dollar" exchange rate is $0.85over the life of the contract?$______________________Place your answer to the nearest dollar without a dollar sign or a comma.
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- You are the managing Director of Sunkwa limited a food processing company based in Atlanta in the United States of America. You are planning to visit Geneva, Switzerland in three months’ time to attend an international business conference. You expect to incur the total cost of SF 5,000 for lodging, meals and transportation during your stay. As of today, the spot exchange rate is $0.60/SF and the three-month forward rate is $0.63/SF. You can buy the three-month call option on SF with the exercise rate of $0.64/SF for the premium of $0.05 per SF. Assume that your expected future spot exchange rate is the same as the forward rate. The three-month interest rate is 6 percent per annum in the United States and 4 percent per annum in Switzerland. 1. calculate the future dollar cost of meeting this SF obligation if you decide to hedge using a forward contract. 2. at what future spot exchange rate will you be…arrow_forwardYou are the managing Director of Sunkwa limited a food processing company based in Atlanta in the United States of America. You are planning to visit Geneva, Switzerland in three months’ time to attend an international business conference. You expect to incur the total cost of SF 5,000 for lodging, meals and transportation during your stay. As of today, the spot exchange rate is $0.60/SF and the three-month forward rate is $0.63/SF. You can buy the three-month call option on SF with the exercise rate of $0.64/SF for the premium of $0.05 per SF. Assume that your expected future spot exchange rate is the same as the forward rate. The three-month interest rate is 6 percent per annum in the United States and 4 percent per annum in Switzerland. QuestionCalculate your expected dollar cost of buying SF5, 000 if you choose to hedge via call option on SF.arrow_forwardYou are the managing Director of Sunkwa limited a food processing company based in Atlanta in the United States of America. You are planning to visit Geneva, Switzerland in three months’ time to attend an international business conference. You expect to incur the total cost of SF 5,000 for lodging, meals and transportation during your stay. As of today, the spot exchange rate is $0.60/SF and the three-month forward rate is $0.63/SF. You can buy the three-month call option on SF with the exercise rate of $0.64/SF for the premium of $0.05 per SF. Assume that your expected future spot exchange rate is the same as the forward rate. The three-month interest rate is 6 percent per annum in the United States and 4 percent per annum in Switzerland.REQUIRED;(i) At what future spot exchange rate will you be indifferent between the forward and option market hedges?arrow_forward
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