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An Arizona firm 100,000 worth of goods to an Italian firm, to be paid in one year. To hedge the risk of euro declining, the
An Arizona firm 100,000 worth of goods to an Italian firm, to be paid in one year. To hedge the risk of euro declining, the U.S. firm buys put options on the euro with a strike price of $1.65 per euro. They pay an option premium of $0.01 per euro. If at maturity, the exchange rate is $1.60, a. need more information to solve the problem O b. the firm will realize $164,500 on the sale net of the cost of hedging c. the firm will realize $165,000 on the sale net of the cost of hedging d. the firm will realize $164,000 on the sale net of the cost of hedging
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