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Suppose now is March 2021, the LSUS Corporation wants to cover its 1,000,000 British Pounds account payable due in 3 months (June 2021), after discussing
Suppose now is March 2021, the LSUS Corporation wants to cover its 1,000,000 British Pounds account payable due in 3 months (June 2021), after discussing with its financial risk manager, it decides to use the call option to hedge the currency risk. A June call option on British Pounds with a near at-the-money strike price is 1.75 dollars/pound is priced currently at 1.5% premium, how much the LSUS corporation needs to pay to buy this option with current spot price 1.764 dollars/pound? O a. $26,250 O b. $26,460 . O c. $1,764,000 d. $0
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