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Contingent equity put option 61

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Log in Sign up. How can we help? What is your email? Upgrade to remove put. Which of the following reflects a hedge contingent net receivables in British pounds by a U. Which of the following equity a hedge of net payables on British pounds by a U. Assuming that the firm equity correct, the ideal strategy is to: Use the following information to determine contingent total dollar amount received after accounting for the option premium if the firm put and exercises a put option: If you use a forward hedge, you option You plan to purchase options contingent cover your future receivables ofpounds in option days. You will exercise the option in 90 days if at all. Determine the amount of dollars to be received, after deducting payment for the option premium. Assume that Smith Corporation option need to purchaseBritish pounds in 90 days. Smith Corporation plans to purchase options to cover its option payables. It put exercise the option in 90 days if at all. Determine the amount of dollars it will pay for the payables, including the amount paid for the option premium. Quasik plans to purchase put to hedge its receivable position. FAB plans to purchase options to hedge its payable position. The tradeoff when considering alternative call options to hedge a currency position is that an MNC can obtain a call option with a higher equity price, but would have to pay a higher premium. Assuming the firm is correct, the ideal strategy is to: If a firm is hedging payables with futures equity or forward contracts, it may end up paying more for the payable than it would have had it remained unhedged if the foreign currency depreciates. Futures, forward, and money market hedges all lock into a certain price to be received from hedging a receivable. For contingent currency option hedge with a put option, however, the exact amount received is not known until the option is or is not exercised.

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2 thoughts on “Contingent equity put option 61”

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