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1. A firm wants to use an option to hedge 10,000 pound needs to pay after 90 days. The premium is $.03 and the exercise

1. A firm wants to use an option to hedge 10,000 pound needs to pay after 90 days. The premium is $.03 and the exercise price of the option is $.75. If the spot rate at the time of maturity is $.80 what is the total amount paid by the MNC if it acts rationally? Construct the contingency grapy for this MNC. (20%)

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