Put Premium

96000000
Total Cost Rate
500000000
500000000
500000000
500000000
500000000
500000000
500000000
500000000
500000000
500000000

2.2
2.4
2.6
2.8
3
3.2
3.4
3.6
3.8
4

1100000000
1200000000
1300000000
1400000000
1500000000
1600000000
1700000000
1800000000
1900000000
2000000000

Uncovered Fully Covred 50-50

1.1
1.6
1.2
1.6
1.3
1.6
1.4
1.6
1.5
1.6
1.6
1.6
1.7
1.6
1.8
1.6
1.9
1.6
2
1.6

Remain Uncovered
2.5

Billions of DM

2
1.5
1
0.5
0
2.2

2.4

2.6

2.8

3.2

3.4

Ending DM/$ exchange rate(Jan 1986)

3.6

3.8

1.35
1.4
1.45
1.5
1.55
1.6
1.65
1.7
1.75
1.8

1.4
1.44
1.48
1.52
1.56
1.6
1.64
1.68
1.72
1.76

Put
1.45
1.48
1.51
1.54
1.57
1.6
1.63
1.66
1.69
1.72

Partial Forward Cover

1.20
1.30
1.40
1.50
1.60
1.70
1.70
1.70
1.70
1.70

2.1
1.9
Billions of DM

30-70

1.7
1.5
1.3
1.1
2.2

2.4

2.6

2.8

3.2

3.4

3.6

3.8

Ending DM/$ exchange rate (Jan 1986)

Fully Forward Cover

2.1
1.9
Billions of DM

40-60

1.7
1.5
1.3
1.1
2.2

2.4

2.6

2.8

3.2

3.4

3.6

Ending DM/$ exchange rate(Jan 1986)

3.8

Hedging Alternatives

d Cover
2.1

Billions of DM

1.9

50-50
40-60

1.7

Uncovered

1.5

Fully Covered
Partially Covered

1.3

30-70

Put Option Cover

1.1
3.8

10

Ending DM/$ exchange rate (Jan 1986)

Foreign Currency Option

2.10

Billions of DM

1.90
1.70
1.50
1.30
1.10
2.2
4

2.4

2.6

2.8

3.2

3.4

3.6

Ending DM/$ exchange rate(Jan 1986)

3.8

Uncovered
Fully Covered
Partially Covered
Put Option Cover