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A U . S . firm has an account receivable of 1 , 0 0 0 , 0 0 0 due in one year. Use
A US firm has an account receivable of due in one year. Use the following information to determine the amount received in dollars by the US firm net of the cost of hedging if they decide to use an option to hedge their exposure. Assume that the exchange rate in one year is $ Enter answer in dollars, rounded to two decimal places.
Call option: strike $ premium: $
Put option: strike: $ premium: $
US interest rate:
Germany interest rate:
Firm's cost of capital:
The US and Germany interest rates quoted above are investment rates, the US firm is able to borrow at per annum above those rates.
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