Suppose that the exchange rate is 1.25 = 1.00.Options (calls and puts) are available on the Philadelphia exchange in units of 10,000 with strike prices of $1.60/1.00.Options (calls and puts) are available on the Philadelphia exchange in units of 10,000 with strike prices of $2.00/1.00. For a U.S. firm to hedge a 100,000 receivable,

Multiple Choice

• buy 10 put options on the pound with a strike in dollars.
• buy 10 call options on the euro with a strike in dollars.
• sell 8 put options on the pound with a strike in dollars.
• sell 10 call options on the euro with a strike in dollars.