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A U. S.- based MNC wishes to make a payment of EUR 750,000 to an affiliate in 30 days. The MNC purchases EUR call options
A U. S.- based MNC wishes to make a payment of EUR 750,000 to an affiliate in 30 days. The MNC purchases EUR call options maturing in 30 days to mitigate currency risk. The option strike price is USD 1.20 and its premium is USD 0.025. At maturity, assume that EURUSD equals 1.23. Estimate the profit if the EUR call options are exercised. (use $x,xxx)
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