Asis Company Provides Following Information And You Need Make One Recommendation Ceo Regardi

ASIS Company provides the following information and you need to make one recommendation to CEO regarding the AR and AP. Hedging Transaction Exposure Information Set Borrowing RateDeposit Rate Euro8%3% USA9%4% •Current Spot Rate: $1.25 •Forward Rate: $1.25 •Put Option (X= 1.26. P= $.01) Call Option (X= 1.25, P= $.01) Future SpotProbability 1.1510% 1.2020% 1.2520% 1.2620% 1.2720% 1.3010% Company has a receivable in euro for the amount of 11,000,000 euro in one year. You are trying to hedge this receivable using the techniques. Answer the following questions using the information set given above. 1.What is the probability that forward hedge outperforms the Money Market Hedge? Answer:_________________________ 2.What is the probability that forward hedge outperforms no hedge? a.Answer:________________________ 3.What is the probability that Money market hedge outperform the option hedge? a.Answer: ____________________ 4.What is your recommendation to this receivable? Justify. (I want the expected value of all)


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