1. Our firm in the U.S. will receive 1 million Euros in mid-December in order to pay a European worker's payment. Our current spot price is $1.1575/ Euro. So, at the spot our value now goes from 1 million to $1,157,500. Management within the firm fears that that the Euro will weaken and the $ value after selling the Euros in December may become lower. We need to arrange an options hedge so that our minimum "all in net cost" (include the option premium) does not go over $1,150,000. List ONE option that will meet the $1,150,000 minimum "all in net purchase cost (make sure option hedge cost is included) in mid-December. Give answer for #1-A-B.

OUR SPOT > $ 1.1575 / EURO Exercise Price U.S. Cents / Euro Call Option Premium U.S. Cents / Euro Put Option Premium Exercise Price December April December April 1.1300 1.1300 3.85 0.65 1.1350 1.1350 1.1400 1.1400 3.10 0.90 1.1450 1.1450 1.85 0.50 1.1500 1.1500 1.50 2.40 0.65 1.25 1.1550 1.1550 1.17 0.85 1.1600 0.90 1.80 1.05 1.65 1.1600 1.1650 0.67 1.35 1.1650 1.1700 0.50 1.35 1.65 2.15 1.1700 1.1750 0.35 2.00 1.1750 1.1800 0.95 2.75 1.1800 OUR SPOT > $ 1.1575 / EURO Circle Option Option's Type month strike price Option Premium per Euro Total cost of Total "all in net Options on 1 cost" of 1 million million Euro Euro (include at t=0 option cost) if it is exercised 1-A 1-B Call or Put