Great Eastern Toys Case

Essay specific features

 

Issue:

Business

 

Written by:

Patricia J

 

Date added:

January 19, 2013

 

Level:

University

 

Grade:

 

No of pages / words:

3 / 794

 

Was viewed:

7424 times

 

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Essay content:

Option contracts on the other hand provide insurance. Options protect the company against future adverse exchange rate movements while allowing for the benefit of an appreciation of DM. However, unlike forward contracts, options require payment of an up-front fee. The premium for the put option @ July 15 is HK$ 252,000 (DM 4,000,000 * HK$ 0...
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The premium for the put option @ July 15 is HK$ 252,000 (DM 4,000,000 * HK$ 0.063/DM). Therefore, GET must pay HK$ 252,000 upfront should we choose the put option. However, given that GET has significant working capital needs and is unable to access external capital as a result of the credit squeeze, the put options is not in the best interest of the company...
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