Business, 28.11.2019 05:31 kbmom1202

Princess cruise company (pcc) purchased a ship from mitsubishi heavy industry. pcc owes mitsubishi heavy industry ¥500 million payable in one year. the current spot rate is ¥124/$ and the one-year forward rate is ¥110/$. interest rate is 5% per annum in japan and 8% per annum in the u. s. the 1-year call option on ¥ at the strike price of $.0081/¥ currently sells for a premium of .014 cents per yen.

(1) construct forward hedge for pcc and calculate the future dollar cost of meeting its ¥ obligation using this hedge.

(2) construct money market hedge (mmh) for pcc and calculate the future dollar cost of meeting its ¥ obligation using mmh.

(3) how to hedge pcc’s foreign currency exposure in option market? conduct cash flow analysis to examine the result of option hedge.

(4) at what future spot rate will pcc be indifferent between option hedge and forward hedge? explain.

Answers: 1

Show answers

Another question on Business

Business, 21.06.2019 17:10

Acompany's income statement showed the following: net income, $145,000 and depreciation expense, $36,300. an examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $11,500; merchandise inventory increased $22,200; and accounts payable increased $5,500. calculate the net cash provided or used by operating activities. $209,500 $139,000 $176,100 $186,500 $142,100

Answers: 2

Answer

Business, 22.06.2019 03:00

Fanning books buys books and magazines directly from publishers and distributes them to grocery stores. the wholesaler expects to purchase the following inventory: april may june required purchases (on account) $ 111,000 $ 131,000 $ 143,000 fanning books accountant prepared the following schedule of cash payments for inventory purchases. fanning books suppliers require that 85 percent of purchases on account be paid in the month of purchase; the remaining 15 percent are paid in the month following the month of purchase. required complete the schedule of cash payments for inventory purchases by filling in the missing amounts. determine the amount of accounts payable the company will report on its pro forma balance sheet at the end of the second quarter.

Answers: 2

Answer

Business, 22.06.2019 15:20

Record the journal entry for the provision for uncollectible accounts under each of the following independent assumptions: a. the allowance for doubtful accounts before adjustment has a credit balance of $500. b. the allowance for doubtful accounts before adjustment has a debit balance of $250. c. assume that octoberʼs credit sales were $70,000. uncollectible accounts expense is estimated at 2% of sales. smith, gaylord n.. excel applications for accounting principles (p. 51). cengage textbook. kindle edition.

Answers: 1

Answer

Business, 22.06.2019 19:00

In north korea, a farmer’s income is the same as a dentist’s income. in a country with a mixed or market economy, the difference between those two professions might be more than 5 times different. how can you explain the fact that individuals doing the same work in different countries do not earn comparable salaries?

Answers: 1

Answer

You know the right answer?

Princess cruise company (pcc) purchased a ship from mitsubishi heavy industry. pcc owes mitsubishi h...

Questions