7 m. Take Test: FIN178-Final Exam - x C Chegg Study | Guided Solution X Mohammed

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7 m. Take Test: FIN178-Final Exam - x C Chegg Study | Guided Solution X Mohammed * - e 0 a Secure | https://blackboard.learn.fresnostate.edu/webapps/assessment/take/launch.jsp?course_assessment_id=_73615_1&course;_id=_66904_1&content;_id=_19.. - & + 0 @ : # Apps G Google o YouTube y twitter D Blackboard Learn O My Fresno State * Safeer o Hotmail M Gmail Remaining Time: 1 hour, 50 minutes, 17 seconds. w Question Completion Status: QUESTION 1 10 points "Saved A US company expects to pay an obligation fluctuating based on the Deutsche Boerse AG German Stock Index DAX (DAX), which is estimated to be €7.5 million, in one year. Current spot rate: So$/E = S1.1750€; Interest rate is 0.75% in US and 0.1% in UK. Based on the net position of forward, future and option you calculated, which tool are you going to select to hedge the currency risk? Ola. Forwards Ob. Futures Oc. Options Money Market Hedge QUESTION 2 10 points Save Answer A US company expects to pay an obligation fluctuating based on the Deutsche Boerse AG German Stock Index DAX (DAX), which is estimated to be €7.5 million, in one year. Current spot rate: So$/€ = S1.1750€; Interest rate is 0.75% in US and 0.1% in UK. You are asked to using the tools learned from FIN178 to hedge the currency risk for the company. • Futures: Contract size € 125000 and one-year futures contract price is S 1.1850 € • Possible actual spot rate Sis/€ in one year: S1.11500€ and S1.2350/E respectively. What is the net position of the future contract (combine both spot transaction and derivative transaction) in one year benchmarking again the current spot rate respectively? Oa A profit of $975,000 and a loss of S825,000 respectively Ob. A loss of $975,000 and a profit of $825,000 respectively

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