Question
A US importer has a CAD 1,675,070 payable due in one year. Estimate the cost today of an options strategy that will eliminate exchange rate
A US importer has a CAD 1,675,070 payable due in one year. Estimate the cost today of an options strategy that will eliminate exchange rate risk.
The following options are available:
Exercise price: USD 0.78 = CAD 1.00
Premium on a call option: $ 0.028 per CAD.
Premium on a put option: $0.044 per CAD.
The cost today is $____.
If applicable, round to the nearest dollar.
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International Financial Markets And The Firm
Authors: Piet Sercu, Raman Uppal
1st Edition
1861523548, 978-1861523549
