Question
A U.S. corporation has purchased currency call options to hedge 70,000 payable. The premium is $0.02 and the exercise price of the option is $0.50.
A U.S. corporation has purchased currency call options to hedge 70,000 payable. The premium is $0.02 and the exercise price of the option is $0.50. If the spot rate at the time of maturity is $0.46, what is the total amount paid by the corporation if it acts rationally?
A. $36,400
B. $35,000
C. $1,400
D. $33,600
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Technical Analysis Of Stock Trends
Authors: Robert D. Edwards, John Magee, W.H.C. Bassetti
10th Edition
1439898189, 978-1439898185
