You can also buy june 06700 usdaud american call options


On February 1, 2017, Sundance Corp., a U.S. firm, agrees to buy Cogna Cola, Inc., an Australian beverage manufacturer for AUD 100 million. The deal is set to close in late June (five months) if it passes the vote of the Board of Directors of Cogna Cola Inc. The deal is priced in Aud, but Sundance’s books and financing are is U.S. dollars. The company is prepared for some variability in the U.S dollar cost of the deal, but has an internal break-even point beyond which the acquisition become unattractive. Assume the spot rate is 0.6721USD/AUD; the June futures rate is 0.6772USD/AUD. You can also buy June 0.6700 USD/AUD American Call options for $0.0217 per AUD. How would you hedge this acquisition including possible outcomes.

Request for Solution File

Ask an Expert for Answer!!
Financial Management: You can also buy june 06700 usdaud american call options
Reference No:- TGS02809073

Expected delivery within 24 Hours