Hedging Strategies Using Options
Order ID:89JHGSJE83839 Style:APA/MLA/Harvard/Chicago Pages:5-10 Instructions:
Hedging Strategies Using Options
The existing spot rate of the Singapore dollar is SGD/USD = 0.752. The 3-month forward rate of the Singapore dollar is SGD/USD = 0.754. The probability distribution of the future spot rate in 3 months is forecasted as follows:
Future Spot Rate SGD/USD Probability
0.736 20%
0.751 50
0.768 30
The money market interest rates are quoted in Annual Percentage Rate as below:
U.S. Singapore
Deposit rate: 0.82% 1.30%
Borrowing rate: 3.25 5.25
A 3-month put option on Singapore dollars is available, with an exercise price of SGD/USD = 0.752 and a premium of $.03 per unit. A 3-month call option on Singapore dollars is available with an exercise price of SGD/USD = 0.762 and a premium of $.01 per unit.
Hedging Strategies Using Options
Assume that ABC Co. will need to pay 2 million Singapore dollars in 3 months. Given the above relevant information, determine whether a forward hedge, money market hedge or a currency options hedge would be most appropriate. Then compare the most appropriate hedge to an unhedged strategy and decide whether ABC Co. should hedge its receivables position. Please provide a detailed explanation of your answers.
Assume that XYZ Inc. expects to receive 5 million Singapore dollars in 3 months. Given the above relevant information, determine whether a forward hedge, a money market hedge or a currency options hedge would be most appropriate. Then, compare the most appropriate hedge to an unhedged strategy, and decide whether XYZ Inc. should hedge its payables position. Please provide a detailed explanation of your answers.Use the following writing guidelines to complete and submit your s:
1. Type your submission, double-spaced, in a standard print font of size 12. Use a
standard document format with 1-inch margins. Do not use any fancy or cursive fonts.
2. Read the assignment carefully, and follow the instructions.
3. Include the following information at the top of your paper:
Name and complete mailing address
Student number
Course title and number
Graded project number (35056500)
4. Be specific. Limit your submission to the issues covered by your chosen topic.
5. Include a reference page in either APA style. On this page, list websites,
books, journals, and all other references used in preparing the submission.
6. Proofread your work carefully. Check for errors in the workings correct spelling, grammar, punctuation,
and capitalization.
Hedging Strategies Using Options
RUBRIC
Excellent Quality
95-100%
Introduction 45-41 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Literature Support
91-84 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Methodology
58-53 points
Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met.
Average Score
50-85%
40-38 points
More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided.
83-76 points
Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration.
52-49 points
Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met.
Poor Quality
0-45%
37-1 points
The background and/or significance are missing. No search history information is provided.
75-1 points
Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration.
48-1 points
There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met
You Can Also Place the Order at www.collegepaper.us/orders/ordernow or www.crucialessay.com/orders/ordernow Hedging Strategies Using Options
Hedging Strategies Using Options