【正文】 72,000,241(75,332)73,000,00075,573073,000,241(75,332)74,000,00075,573074,000,241(75,332)75,000,00075,573075,000,241(75,332)76,000,00075,573076,000,241(75,332)77,000,00075,573077,000,241(75,332)78,000,00075,573078,000,241(75,332)79,000,00075,573079,000,241(75,332)80,000,00075,573080,000,241(75,332)075,57380,250,00080,250,241(75,332)075,57380,250,00080,250,241(75,332)075,57380,250,00080,250,241(75,332)075,57380,250,00080,250,241(75,332)075,57380,250,00080,250,2414. The German pany is bidding on a contract which they cannot be certain of winning. Thus, the need to execute a currency transaction is similarly uncertain, and using a forward or futures as a hedge is inappropriate, because it would force them to perform even if they do not win the contract.Using a sterling put option as a hedge for this transaction makes the most sense. For a premium of:12 million STG x = 193,200 STG,they can assure themselves that adverse movements in the pound sterling exchange rate will not diminish the profitability of the project (and hence the feasibility of their bid), while at the same time allowing the potential for gains from sterling appreciation.5. Since AMC in concerned about the adverse effects that a strengthening of the dollar would have on its business, we need to create a situation in which it will profit from such an appreciation. Purchasing a yen put or a dollar call will achieve this objective. The data in Exhibit 1, row 7 represent a 10 percent appreciation of the dollar ( strike vs. forward rate) and can be used to hedge against a similar appreciation of the dollar.For every million yen of hedging, the cost would be:Yen 100,000,000 x = 127 Yen.To determine the breakeven point, we need to pute the value of this option if the dollar appreciated 10 percent (spot rose to ), and subtract from it the premium we paid. This profit would be pared with the profit earned on five to 10 percent of AMC’s sales (which would be lost as a result of the dollar appreciation). The number of options to be purchased which would equalize these two quantities would represent the breakeven point.Example 5:Hedge the economic cost of the depreciating Yen to AMC.If we assume that AMC sales fall in direct proportion to depreciation in the yen (., a 10 percent decline in yen and 10 percent decline in sales), then we can hedge the full value of AMC’s sales. I have assumed $100 million in sales.1) Buy yen puts contracts needed = Expected Sales *Current 165。/$ Rate / Contract size9600 = ($100,000,000)(120165。/$) / 165。1,250,0002) Total Cost = ( contracts)(contract size)(premium)$1,524,000 = (9600)( 165。1,250,000)($165。)3) Floor rate = Exercise – Premium165。/$ = 165。/$ $1,524,000/12,000,000,000165。4) The payoff changes depending on the level of the 165。/$ rate. The following table summarizes the payoffs. An equilibrium is reached when the spot rate equals the floor rate.AMC ProfitabilityYen/$ SpotPut PayoffSalesNet Profit120(1,524,990)100,000,00098,475,010121(1,524,990)99,173,66497,648,564122(1,524,990)98,360,65696,835,666123(1,524,990)97,560,97686,035,986124(1,524,990)96,774,19495,249,204125(1,524,990)96,000,00094,475,010126(1,524,990)95,238,09593,713,105127(847,829)94,488,18993,640,360128(109,640)93,750,00093,640,360129617,10493,023,25693,640,3601301,332,66892,307,69293,640,3601312,037,30791,603,05393,640,3601322,731,26990,909,09193,640,3601333,414,79690,225,66493,640,3601344,088,12289,552,23993,640,3601354,751,43188,888,88993,640,3601365,405,06688,235,29493,640,3601376,049,11887,591,24193,640,3601386,683,83986,966,52293,640,3601397,308,42586,330,93693,640,3601407,926,07585,714,28693,640,3601418,533,97785,106,38393,640,3601429,133,31884,507,04293,640,3601439,724,27683,916,08493,640,36014410,307,02783,333,33393,640,36014510,881,74082,758,62193,640,36014611,448,57982,191,78193,640,36014712,007,70781,632,65393,640,36014812,569,27981,081,08193,640,36014913,103,44880,536,91393,640,36015013,640,36080,000,00093,640,360The parent has a DM payable, and Lira receivable. It has several ways to cover its exposure。 forwards, options, or swaps.The forward would be acceptable for the DM loan, because it has a known quantity and maturity, but the Lira exposure would retain some of its uncertainty because these factors are not assured.The parent could buy DM calls and Lira puts. This would allow them to take advantage of favorable currency fluctuations, but would require paying for two premiums.Finally, they could swap their Lira receivable into DM. This would leave a net DM exposure which would probably be smaller than the amount of the loan, which they could hedge using forwards or options, depending upon their risk outlook.The pany has Lira receivables, and is concerned about possible depreciation versus the dollar. Because of the high costs of Lira options, they instead buy DM puts, making the assumption that movement in the DM and Lira exchange rates versus the dollar correlate well.A hedge of lira using DM options will depend on the relationship between lira FX rates and DM options. This relationship could be determined using a regression of historical data.The hedged risk as a percent of the open risk can be estimated as:S