Business
Business, 06.11.2019 04:31, zchwilke2981

Au. s. firm holds an asset in great britain and faces the following scenario:
state 1state 2state 3

probability25%50%25%
spot rate$2.50/£$2.00/£$1.60/£
p*£ 1,800£2,250£2,812.50
p$4,500$4,500$4,500

where,
p* = pound sterling price of the asset held by the u. s. firm
p = dollar price of the same asset

which of the following would be an effective hedge?
a) buy £2,500 forward at the 1-year forward rate, f1($/£), that prevails at time zero.
b) sell £25,000 forward at the 1-year forward rate, f1($/£), that prevails at time zero.
c) sell £2,278.13 forward at the 1-year forward rate, f1($/£), that prevails at time zero.
d) none of the options

answer
Answers: 1

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Au. s. firm holds an asset in great britain and faces the following scenario:
state 1state 2s...

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