These are the case question, must be answered
- Why is Cain concerned by the exchange rate fluctuation? Is her position long or short?
- If Can decides to use options would she use a put or a call?
- Calculate the impact of the two hedging strategies and the unhedge positionunder the following three scenarios at the end of January:
- US$ = C$
- US$ = C$0.90
- US$ = CS1.10 (to simplify, ignore difference in time value over the 3-month period.)
- Should Cain hedge her position in US$? Why or why not?
- Which hedge should she use?
- If you chose the option, specify the option price.
The paper should consist a brief description of the case, an explanation of the problem, alternative solutions, your recommendations, including materials, such as spreadsheets, needed to justify your recommendation