Due to your import of wine from France, you have an account payablein threemonths. You desire to hedge this accountusing the options market. The following info (including the table below) are available to you. Calculate the outcome of this option if you end up executing it at the end of the three months.

todays date = March1, 2020Spot rate on the above date = $1.1450/euroAccount payable amount = euro 48,000.00Commercial interest rate on US dollar = 6 percentThe calls and puts premiums in the table below are in percent.

	CALLS	PUTS
Strike Price ($/euro)	MAY	MAY
1.135	2.25	1.34
1.140	1.98	1.57
1.160	1.10	1.84

1.Do you buy a May call or a May put (insert call or put)

2.If you select the May strike price of $1,14 and execute this options, what would be your outcome?

3.If you select the May strike price of $1,14, what would be your options premium cost in USD at the point of entering into the options?

4.Assuming that you execute this option, which May strike price is the best? Enter your selected strike price in dollar

5.If at the end of the 3rd month the spot rate would be $1.12, what do you do with this option?

a. I will execute it

b. I will let it expire

c. I will be indifferent.

d. None of the answers in this group are relevant