Question
1. A U.S. corporation has purchased currency call options to hedge a 75,000 payable in 9 months. The premium is $.02 and the exercise price
1. A U.S. corporation has purchased currency call options to hedge a 75,000 payable in 9 months. The premium is $.02 and the exercise price of the option is $1.50. If the spot rate at the time of maturity is $1.65, what is the total amount paid by the corporation if it acts rationally?
2.A U.S. corporation has purchased currency put options to hedge a 150,000 receivable in 9 months. The premium is $.02 and the exercise price of the option is $1.50. If the spot rate at the time of maturity is $1.65, what is the total amount received by the corporation if it acts rationally?
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