Question
Suppose your firm will export to Peru (currency Peruvian New Sol [PEN]) and will receive PEN 750,000 in 90 days. Put options with a strike
Suppose your firm will export to Peru (currency Peruvian New Sol [PEN]) and will receive PEN 750,000 in 90 days. Put options with a strike price of USD .300 are available for a premium of USD .025 per unit. Your firm decides to hedge its exposure by purchasing Put options. Suppose in 90 days the spot rate is USD .315 / PEN. Your net cash inflow from this transaction is:
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Financial Markets And Institutions
Authors: Anthony Saunders, Marcia Cornett
5th Edition
0078034663, 978-0078034664
