document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=634351>Question 634351</A>: <I><SPAN STYLE=\"word-break: break-all;\"> 1. Nickel Plains of Canada has purchased 500,000 pounds of nickel from Coin Ltd. at US$6.96, payable in 90 			<BR>\n" );
document.write( "days. The current spot rate is 1.3404 ($Can / $U.S.) and the 90-day forward is 1.3421. The vice-president of 			<BR>\n" );
document.write( "finance at Nickel Plains suggests that the spot rate in three months time will be 1.3333.			<BR>\n" );
document.write( "Interest rates in Canada are currently 2 percent for 90 days and 1.6 percent in the United States.			<BR>\n" );
document.write( "			<BR>\n" );
document.write( "a. Outline the various options available to Nickel Plains to handle its foreign exchange exposure.			<BR>\n" );
document.write( "			<BR>\n" );
document.write( "b. Make a recommendation.			<BR>\n" );
document.write( "			<BR>\n" );
document.write( "SOLUTIONS 			<BR>\n" );
document.write( "			<BR>\n" );
document.write( "Formulas & Data to complete the reqirements of problem 	step by step		<BR>\n" );
document.write( "			<BR>\n" );
document.write( "a. Outline the various options available to Nickel Plains to handle its foreign exchange exposure.			<BR>\n" );
document.write( "			<BR>\n" );
document.write( "Purchase in three month’s time (90 days):			<BR>\n" );
document.write( "			<BR>\n" );
document.write( "	Amount of nickel	500,000	<BR>\n" );
document.write( "	Price	 $6.96 	<BR>\n" );
document.write( "	Total contract 	FORMULA	<BR>\n" );
document.write( "			<BR>\n" );
document.write( "1. Take a chance on the spot rate (at the future date):			<BR>\n" );
document.write( "			<BR>\n" );
document.write( "	Spot rate	VALUE	<BR>\n" );
document.write( "	Future cost	FORMULA	<BR>\n" );
document.write( "			<BR>\n" );
document.write( "2. Book a forward contract:			<BR>\n" );
document.write( "			<BR>\n" );
document.write( "	Forward rate	VALUE	<BR>\n" );
document.write( "	Future cost	FORMULA	<BR>\n" );
document.write( "			<BR>\n" );
document.write( "3. Money market hedge:			<BR>\n" );
document.write( "			<BR>\n" );
document.write( "i. Invest 90 day discounted $1,475,000 (to meet contract):			<BR>\n" );
document.write( "	US interest rate	VALUE	<BR>\n" );
document.write( "	Discounted amount	FORMULA	<BR>\n" );
document.write( "			<BR>\n" );
document.write( "ii. Convert to $ Canadian at the spot rate:			<BR>\n" );
document.write( "	Spot rate	VALUE	<BR>\n" );
document.write( "	Canadian	FORMULA	<BR>\n" );
document.write( "			<BR>\n" );
document.write( "iii. Borrow in Canada at the current interest rates:			<BR>\n" );
document.write( "	CDN. interest rate	VALUE	<BR>\n" );
document.write( "	Future cost	FORMULA	<BR>\n" );
document.write( "	Pay off loan		<BR>\n" );
document.write( "			<BR>\n" );
document.write( "b. Make a recommendation			<BR>\n" );
document.write( " </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #399517 by </B><A HREF=/tutors/aboutme.mpl?userid=lynnlo><B>lynnlo(4176)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=lynnlo><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/images/nopicture.jpg><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=399517\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> is this a whole page of your homework,you should try to do some of it. yu want a tutor to do your whole sheet,in that way you will not understand what to do when you hve another problem like this </SPAN>\n" );
document.write( "</TD></TR></TABLE>\n" );