10/12/16

bkk
US FIRM IMPORTS FROM UK (1 Million GBP)
SPOT T0 :

1 GBP = 1,7120 USD

FORWARD T0 : 1 GBP = 1,7255 USD

Spot Rate at in T1
1 GBP = ? USD

10/12/16

bkk

RISK: GBP
US FIRM BUYS GBP FORWARD

FORWARD GAIN
+ USD
0
GBP
Spot Rate at in T1
Hyp 2

1 GBP =1.7440 USD

bkk

0
LOSS
USD

GBP

1 GBP = 1,7255 USD

Spot Rate at in T1

Hyp 1 1 GBP = 1.6850 USD

10/12/16

pearson

buys three A 380

SPOT T0 :

1 USD = 530 CLP

FORWARD T0 : 1 USD = 515 CLP

2 hypotheses for the spot rate at the settlement date t1

* 1 USD = 555 CLP
* 1 USD = 508 CLP

RISK: USD
Lan Chile BUYS CLP FORWARD
Potential Gain / Loss?

Gain

1USD=515 CLP

1USD= 555 CLP

900 * 515 = 463 500 000 000 CLP

10/12/16

RISK: USD
Lan Chile BUYS CLP FORWARD
Potential Gain / Loss?

Gain

1USD=515 CLP

1USD= 555 CLP

900 * 515 = 463 500 000 000 CLP

bkk

- 2.10

1.45
1.49
SPOT T1 1 EUR = ? USD

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- Apple (Us firm) buys tickets from Japan Airlines in Yen (JPY)
on January 1st (T0) / Traditional meeting in Osaka.
-Apple will have to pay 100 000 000 JPY in 3 months (T1).
-Spot T0 1 USD = 89.0100 JPY

bkk

-Option contract in (T0):

Yen Put Strike Price: 1 JPY = 0.0100 Usd
Yen Put Option Cost: 0.0005 USD per Yen
Yen Call Strike Price: 1 JPY = 0.0120 Usd
Yen Call Option Cost: 0.0005 USD per Yen
Contract size: 1 000 000 JPY / Brokerage fees: 50 USD / Contract
Apples strategy in T0
3 months later in (T1) a if the spot rate is H1: 1= USD = 75.2501 JPY
H21 USD = 93.2300 JPY
- When should option be exercised ?
- What will be the total cost for Apple ?
- Draw a graph ?