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A firm wants to use an option to hedge 2.5 million in Swiss Franc receivables from Switzerland. The premium is $.05. The exercise price is
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A firm wants to use an option to hedge 2.5 million in Swiss Franc receivables from Switzerland. The premium is $.05. The exercise price is $.75. If the option is exercised, what is the total amount of dollars received (after accounting for the premium paid)?
a. $1,750,000
b. $2,000,000
c. $1,250,000
d. $1,875,000
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