Question 1 Your company expects to have following cash flows in AUD in the next 30 days. Also, you recei

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Question 1












Your
company expects to have following cash flows in AUD in the next 30
days.




Also, you
receive following quotes for Put and Call option for AUD with
expiration date in 30 days


Assume that
you decide to hedge the AUD position using option contract






Assume that
at the expiration date the AUD rate is



$0.62


















Please find
the amount of USD you have to pay, or you will receive at the end
of the 30-day period



Cash Flow in AUD













Transaction ID

Receivables

Payables









1

5,000,000











2



3,000,000









3



10,000,000









4

15,000,000











5

20,000,000

























Option

Strike Price

Premium per AUD









PUT

0.695

0.0025









CALL

0.715

0.003























Question 2












Your firm
will receive CAD20,000,000 in the next 3 months.






You have
following information:










Current
spot rate of CAD1

$0.92








3-month
interest rate in CAD

1.25%








3-month
interest rate in USD

1.00%








Interest
rates are for 3-month, so you don't need to do any conversion.




















If you
decide to hedge your CAD receivables, please find the amount of USD
you eventually receive.


Please use
Excel for calculation to avoid rounding error