Answering two questions regarding my International Finance Case Study (Derivatives/Options)
Budget: $30 – $250 USD
I am currently working on an assignment but am having a hard time understanding two (2) questions regarding payment decisions for a deal between United Airlines and the Airbus.
I just need someone who can explain in writing the implications of these two alternatives that are being considered by United in terms of making payments to Airbus for this deal. Answering these questions requires knowledge of currency options + foreign exchange derivatives and must also show their math in writing. Simple math is required when computing forward contracts and currency options (all work and information will be provided).
Two alternatives that are being considered by United for 2024 payment only:
Q1 - Buy a bespoke Forward Contract for 1.125, Citibank N.A. will record a contingent liability of 4% of the contract amount against UAL’s credit lines ; fees paid by UAL to Citibank N.A. in connection with all of UAL’s credit facilities may be ignored in this case. (explain the implications of the decision)
Q2 - Buy a two-month Call Option on €uros. Please see that table on the next page for strike prices and premiums. The premium must be paid now. (explain the implications of the decision)
I just need someone who can explain in writing the implications of these two alternatives that are being considered by United in terms of making payments to Airbus for this deal. Answering these questions requires knowledge of currency options + foreign exchange derivatives and must also show their math in writing. Simple math is required when computing forward contracts and currency options (all work and information will be provided).
Two alternatives that are being considered by United for 2024 payment only:
Q1 - Buy a bespoke Forward Contract for 1.125, Citibank N.A. will record a contingent liability of 4% of the contract amount against UAL’s credit lines ; fees paid by UAL to Citibank N.A. in connection with all of UAL’s credit facilities may be ignored in this case. (explain the implications of the decision)
Q2 - Buy a two-month Call Option on €uros. Please see that table on the next page for strike prices and premiums. The premium must be paid now. (explain the implications of the decision)