Business, 02.07.2019 06:10 yokis2710

Crown co. is expecting to receive 100,000 british pounds in one year. crown expects the spot rate of british pound to be $1.49 in a year, so it decides to avoid exchange rate risk by hedging its receivables. the spot rate of the pound is quoted at $1.51. the strike price of put and call options are $1.54 and $1.53 respectively. the premium on both options is $.03. the one-year forward rate exhibits a 2.65% premium. assume there are no transaction costs. what is the best possible hedging strategy and how many u. s. dollars crown co. will receive under this strategy?

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Crown co. is expecting to receive 100,000 british pounds in one year. crown expects the spot rate of...

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