Exchange Rate Business Assignment Help
Imports and exports are done in many countries across the world, making life more interesting since states have mutual benefits. This is also taught in business studies at different levels due to the interconnectedness. All the same, the subject is a nudle to many learners. Get business assignment help by reaching out to myhomework writers. Below is a simple question.
Suppose your company just exported 1 million US dollars in goods to the USA on 15 Nov 2017, the spot exchange rate is 6.6RMB/$.The U.S importer promised to pay the 1 million dollars after 1 year, the expected spot exchange rate between US dollars and RMB after is 6.3 or 7.0. Your boss is a risk-averse person, he wants you to use the option instrument to avoid exchange risk. you know the price of a call option for 200,000 US dollars is 5000RMB and the put option is 7000RMB, and the exercise price is 6,6RMB/$.What should you do? If your boss won’t obtain the profit from RMB depreciation, what should you do? The risk-free rate is 5%. Please give the payoff profile of options trade and spot exchange trade.
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