(Transaction Exposure) Trident – A U.S.-based company, has concluded a sale of telecommunications equipment to Regency (

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Transaction Exposure Trident A U S Based Company Has Concluded A Sale Of Telecommunications Equipment To Regency 1 (209.1 KiB) Viewed 83 times

(Transaction Exposure) Trident – A U.S.-based company, has concluded a sale of telecommunications equipment to Regency (U.K.). A total payment of £2,000,000 is due in 90 days. Given the following exchange rates and interest rates, the break-even investment rate (for money market hedge) is % when comparing the forward hedge and the money market hedge. Value £2,000,000.00 $1.5610 $1.5436 6.000% 6.000% 6.500% 8.000% Assumptions 90-day A/R in pounds Spot rate, US$ per pound ($/£) 90-day forward rate, US$ per pound ($/£) 3-month U.S. dollar investment rate 3-month U.S. dollar borrowing rate 3-month UK investment interest rate 3-month UK borrowing interest rate Put options on the British pound: Strike rates, US$/pound ($/£) Strike rate ($/£) Put option premium Strike rate ($/£) Put option premium Strike rate ($/£) Call option premium Trident's WACC Maria Gonzalez's expected spot rate in 90 days, US$ per pound ($/£) $1.55 1.554% $1.54 1.54% $1.55 1.511.% 14.000% $1.5431