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Problem 8 Intro Perfect Purchase is a U.S. electronics retailer importing consumer electronics from Japan. The company will need 11 million yen (M) in one
Problem 8 Intro Perfect Purchase is a U.S. electronics retailer importing consumer electronics from Japan. The company will need 11 million yen (M) in one year to pay its suppliers. The firm expects the following exchange rate scenarios and probabilities: Scenario Probability Spot rate in one year $0.0087 $0.009 $0.0093 B 0.1 0.5 0.4 A call option on yen expiring in one year costs $0.00042 per yen and has an exercise price of $0.009 per yen. Part 1 Attempt 1/10 for 10 pts. What is the total cost of hedging your payables with a call option (in $)? + decimals Submit
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