Question
A U.S. corporation has purchased currency call options to hedge a 70,000-pound payable. The premium is $.02 and the exercise price of the option is
A U.S. corporation has purchased currency call options to hedge a 70,000-pound payable. The premium is $.02 and the exercise price of the option is $.50. If the spot rate at the time of maturity is $.65, what is the total amount paid by the corporation if it acts rationally? (Please ignore the time value of premium)
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Foundations Of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
11th Canadian Edition
1259024970, 978-1259265921
