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A U.S. importer is purchased denim jeans from a supplier in Istanbul, Turkey under the payment terms of d/a 60.The currency of the transaction is
- A U.S. importer is purchased denim jeans from a supplier in Istanbul, Turkey under the payment terms of d/a 60.The currency of the transaction is Euros.The merchandise shipped on May 10. On May 10,the spot rate on the Euro was 1.14.The importer, to reduce its exposure, purchased a 60 day call option on Euroswith astrike price of 1.15. On July 10, when the importer is obligated to pay the seller in Turkey, the spot rate on the Euro is 1.17. On July 10, it should
- Exercise the option to purchase Euros at the rate of 1.15
- Exercise the option to sell Euros at the rate of 1.15
- Let the option expire and purchase Euros on the spot market at the rate of 1.17
- Let the option expire and purchase Euros on the spot market at the rate of 1.15
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