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Peugeot SA, a French company, is importing steel from England, and is expected to pay 50m GBP in 6 months. Spot rate of GBP/EUR
Peugeot SA, a French company, is importing steel from England, and is expected to pay 50m GBP in 6 months. Spot rate of GBP/EUR $1.14. Call option rate on GBP/EUR with delivery in 6- month is $1.19 with premium of $0.01. In order to hedge its position, Peugeot decided to buy the call option. Six months later, if the spot rate of the GBP/EUR is $1.21. Will Peugeot exercise the option? What is the total amount that Peugeot will pay in EUR?
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Peugeot decided to buy a call option on GBPEUR with a strike price of 119 to hedge its po...
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International financial management
Authors: Jeff Madura
9th Edition
978-0324593495, 324568207, 324568193, 032459349X, 9780324568202, 9780324568196, 978-0324593471
