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Suppose CM Capital is negotiating a financing deal with a hot startup firm. If the negotiation is successful, which will be known in three months,
Suppose CM Capital is negotiating a financing deal with a hot startup firm. If the negotiation is successful, which will be known in three months, the venture capitalist is going to commit CNY as the first installment. To hedge the contingent exposure, the venture capitalist plans to buy options on Chinese yuan. a What type of option should CM Capital buy, Call or Put? Why?
Suppose CM Capital is negotiating a financing deal with a hot startup firm. If the negotiation
is successful, which will be known in three months, the venture capitalist is going to commit
CNY as the first installment. To hedge the contingent exposure, the venture
capitalist plans to buy options on Chinese yuan.
a What type of option should CM Capital buy, Call or Put? Why?
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