1 a The rate of interest available on a one-year government bond in Canada is 5 per cent. A…

1 a The rate of interest available on a one-year government bond in Canada is 5 per cent. A similar-risk bond in Australia yields 7 per cent. The current spot rate of exchange is C$1.02/A$. What will be the one-year forward rate if the market obeys the interest rate parity theory? b Describe the expectation theory of foreign exchange. 2* (Examination level) Lozenge plc has taken delivery of 50,000 electronic devices from a Malaysian company. The seller is in a strong bargaining position and has priced the devices in Malaysian dollars at M$12 each. It has granted Lozenge three months’ credit. The Malaysian interest rate is 3 per cent per quarter. Lozenge has all its money tied up in its operations but could borrow in sterling at 3 per cent per quarter (three months) if necessary. A three-month sterling put, Malaysian dollar call currency option with a strike price of M$5.425/£ for M$600,000 is available for a premium of M$15,000. Discuss and illustrate three hedging strategies available to Lozenge. Weigh up the advantages and disadvantages of each strategy. Show all calculations.  

Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more