1.MoneyMarketHedgeonReceivablesAssumethatStevensPointCo.

hasnet
receivablesof100,000Singaporedollarsin90days.ThespotrateoftheS$is$.50,and
theSingaporeinterestrate
is2percentover90days.SuggesthowtheU.S.firmcouldimplementamoneymarket
hedge.Beprecise.
2.RealCostofHedgingPayablesAssumethatSuffolkCo.negotiatedaforwardcontract
topurchase200,000Britishpoundsin90days.The90dayforwardratewas$1.40per
Britishpound.ThepoundstobepurchasedweretobeusedtopurchaseBritishsupplies.
Onthedaythepoundsweredeliveredinaccordancewiththeforwardcontract,thespot
rateoftheBritishpoundwas$1.44.Whatwastherealcostofhedgingthepayablesfor
thisU.S.firm?
3.ForwardversusMoneyMarketHedgeonPayablesAssumethefollowinginformation:

AssumethattheSantaBarbaraCo.intheUnitedStateswillneed300,000ringgitin90
days.Itwishestohedgethispayablesposition.Woulditbebetteroffusingaforward
hedgeoramoneymarkethedge?Substantiateyouranswerwithestimatedcostsforeach
typeofhedge.

4.LeadingandLaggingUnderwhatconditionswouldZonaCo.ssubsidiaryconsider
usingaleadingstrategytoreducetransactionexposure?Underwhatconditionswould
ZonaCo.ssubsidiaryconsiderusingalaggingstrategytoreducetransactionexposure?
5.HedgingwithPutOptionsAstreasurerofTucsonCorp.(aU.S.exportertoNew
Zealand),youmustdecidehowtohedge(ifatall)futurereceivablesof250,000New
Zealanddollars90daysfromnow.Putoptionsareavailableforapremium
of$.03perunitandanexercisepriceof$.49perNewZealanddollar.Theforecastedspot
rateoftheNZ$in90daysfollows:

Giventhatyouhedgeyourpositionwithoptions,createaprobabilitydistributionforU.S.
dollarstobereceivedin90days