A presentation of case study and presentation on International Financial Management where mainly four things were studied 1) Arbitrage Oppurtunity 2) Exercising the put and call option 3) Sell or Keep 4) Risk of Expose

1. BLADE Inc.(assessmentof Arbitrage)
Md. Tanvir Hossain
111 131 072

2. Is
Arbitrage
Feasible ?

3. USD
Thai Baht
Japanese
Yen
Convert $100000 to Thai
Baht= THB 4405286.344
Exchange Thai Baht to get
Japanese Yen = ¥ 11850220.26
Convert Japanese Yen into USD = $100726.8722.
Making Arbitrage Profit of $726.87 (0.73%)
TRIANGULAR ARBITRAGE

4. THB 4405286.34
Convert USD to Thai Baht
THB 4570484.58
After Investment
$ 102,835.90
Convert Thai Baht
Into USD
2.84%
Rate of Return
Covered Interest Arbitrage

5. BLADE Inc.(Useof CurrencyDerivatives)
Md. Ismail Hossen
111 131 394

6. 0756 $0.00792
5% 10%
01512 $0.0001134
.00% 1.43%
$1890 $1417.5
4500 $99000
After Event
Condition
Exercise Price No more than 5%
Premium Paid No more than 1.5%

7. Going unhedged might have negative effect on
Blade Inc. in two months and it might have to pay
a lot more than it has to pay if it hedges it
payment.
If the speculators capitalize on the opportunities that arise through
speculation, then it can be said that the future spot rate will equal to the
given future price which is $.006912.
What Happens
to Future Rate
In Case of Speculation
Can
Blade Inc.
Stay Unhedged
$112,500
$96,390
Cost
Cost
Unhedged Call Option

8. $86,400
$82,500
$86,400
$88,290
$87,818
COST
Cost in Various Situations
Unhedged Unhedged2 Future Contract Call Option 1 Call Option 2

9. $98,900
$86,400
$96,390
$100,318
COST
Cost in Various Situations
Unhedged Future Contract Call Option 1 Call Option 2

10. ZAPA Chemical & BuBA
Md. Owsin Khan
111 131 393

11. housands)
DM1.4000 DM1.3000
5428.57 5846.15
5131.40 5131.40
Whether Stephanie Mayo should sell
the put option protection already
in place or not?

12. Altered Stephanie’s view of the DM/$ exchange rate
5%devaluation of Spanish peseta
Cutof lending rate byBundesbank
Withdrawal of GBP and LIT from ERM
Stress inthe EMS(devaluation pressure on LIT and GBP)
UncertaintyinEuropedue to Frenchvote

14. Cost as a benchmark to measure hedging effectiveness should
be used that is to maximize the expected value but giving more
priority to minimize the variance or risk.
If the put option was sold and forward contract was signed Zapa
could locked it position to $5.13 Million inflow instead of looking
for speculative return from USD’s depreciation against DM.
Benchmarking

15. BLADE Inc.(to investin Thailand)
Jaheda Alam
111 131 260

16. Blade Inc.
Exposed To NOT Exposed To
Economic
Exposer
Transaction
exposure
Translation Exposer

17. Currency Total Inflow
Total
Outflow
Net Flow
Expected
Exchange Net Flow (USD)
Cash flow

18. Currency
Net Inflow or Range of Exchange Range of Net Inflows or OutflowsEstimation of the range of net inflows and outflows

19. Reducing Transaction Exposure
Depreciation
of the Currency
Overall Transaction Exposure
Reducing
NetTransaction
Blade Inc.

20. THANK
YOU