Question
A U.S. importing company requires 150,000 GBP in three months. Spot rate: 1.29 GBP/USD Expected 3-month spot rate: 1.33 GBP/USD 3-month European Call Option (Strike):
A U.S. importing company requires 150,000 GBP in three months.
Spot rate: 1.29 GBP/USD
Expected 3-month spot rate: 1.33 GBP/USD
3-month European Call Option (Strike): 1.30 GBP/USD, Premium 4c USD
3-month European Put Option (Strike): 1.34 GBP/USD, Premium 3c USD
The company will use an options hedge.
What is the expected net cost of the hedge and payable (combined) in USD?
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Practical Financial Management
Authors: William R. Lasher
6th Edition
1439080496, 978-1439080498
