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Case 3 Foreign Exchange Trading Strategies at General Motors Due June 11 Questions: 1. What is the principal difference mingled with transactional and translational impressions? Why do you think GMs polity is to surround part of transactional ikons but to generally not beleaguer translational moving- yield shows? The rest of the questions refer to transactional moving picture only. Please slight the translational exposure. 2. Create a represent of growth/ passing game (relative to the current exchange rate) to GM in $US as a function of vacillation in Canadian dollar mark for a send of 3-month-ahead spot rates ranging from 1.40 to 1.80 if the transactional exposure of $ dog-iron 1,682M remains unhedged. 3. a. allege that GM decides to hedge its 50% of cad transactional exposure of $ wiener 1,682M apply a three-month forward contract. On the graph in 2), add a graph of the resulting gain/loss environable to a combination of the underl ying transactional exposure to CAD and gains/losings due to the forward contract. b. need today that GM decides to hedge 75% of its CAD exposure utilize a three-month forward. tag on a graph of the resulting exposure to CAD. c. Assume forthwith that GM decides to hedge 100% of its CAD exposure using a three-month forward. take a graph of the resulting exposure to CAD. 4. d.

Assume without delay that GM decides to hedge 50% of its transactional exposure using three-month pick up options on CAD with the expiration monetary value of 1.5667. Add a graph of the resulting exposure to CAD. e. Assume direct that GM decides to hedge 75% of its transactional exposure using three-mo! nth call options on CAD. Add a graph of the resulting exposure to CAD. f. Assume now that GM decides to hedge 100% of its transactional exposure using three-month call options on CAD. Add a graph of the resulting exposure to CAD. 5. What be the exchange rates at which GM breaks even up under the scenarios in 2-4 above? 6. Assume now that in addition to the financial hedging possibilities,...If you want to get a full essay, order it on our website: OrderEssay.net

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