Question

Please show calculations

XYZ Corporation, located in the United States, has accounts payable obligation of ¥750 million payable in one year to a bank in Tokyo. The current spot rate is Y116/51.00 and the one-year forward rate is 1109/51.00. The annual interest rate is 3 percent in Japan and 6 percent in the United States. XYZ can also buy a one year hedge is?

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

W | © V Ora 1x 9 ENG 05:37 31-03-2020 ... o X 11843 - X fix I K IL IM IN 10 IP 827 828 829 830 831 money market hedge AS WE ARE HAVING PAYABLES WE NEED TO HAVE 750000000 YEN AT THE END OF THE YEAR SO WE NEED TO INVEST TODAY 832 728155339.81 (750000000/1.03] 833 834 next 835 TO INVEST ABOVE YEN AMOUNT, WE NEED TO BORROW AT SPOT RATE AMOUNT OF DOLLARS TO BE BORROWED = 6680324.22 [728155339.81 /109] 836 837 838 next GUARANTEED DOLLAR PAYMENT = 7081143.67 [6680324.22*(1+0.06)] 839 ANSWER 7081143.67 840 841 842 843 844 845 846 847 848 849 850 KE CAPM UTILITY, SHARPE, beta coNvexity DGM beta port future INDEX INTL CAP BUD SANDRINE LEASING PORTFOLOQ DIR right clean YIELD bc ... 7