Question
Arnold International Inc. (AI), headquartered in California, just bought electronic equipment from a supplier in Japan for JPY 100,000,000 with the payment due in three
Arnold International Inc. (AI), headquartered in California, just bought electronic equipment from a supplier in Japan for JPY 100,000,000 with the payment due in three months.If AI uses currency options and exercises them, what is the value of its payables in three months?
Current Spot RateWACCPremium on 3-month calloption (Strike price = JPY120/USD)
Premium on 3-month put option (Strike price = JPY120/USD)JPY118/USD12% Per annum1.50%1.35%
USD 815,875.71
USD 816,384.18
USD 844,244.35
USD 846,426.55
USD 848,608.76
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Introduces Quantitative Finance
Authors: Paul Wilmott
2nd edition
470319585, 470319581, 978-0470319581
