Use the following information to answer question 1 to 3:

Walmartis considering the purchase ofBritish Poundcall options (contract size:62,500) with a strike price $1.31/. The premium is$0.025/.

Question 1:

Ifthe spot at expiration is $1.28/, what is the Walmart's profit?

Question 2:

If the spot atexpiration is $1.33/, what is theWalmart's profit?

Question 3:

Ifthe spot at expiration is $1.36/Peso, what is the Walmart's profit?

Use the following information to answer question4to6:

Amazon buys a Mexico Pesoputoption (contract size: 500,000 Peso) at a premium of $0.0082/Peso. The exercise price is $0.054/Peso:

Question4:

If the spot at expiration is$0.062/Peso, what is theAmazon'sprofit?

Question5:

If the spot at expiration is$0.050/Peso, what is theAmazon'sprofit?

Question6:

If the spot at expiration is0.042/Peso,,what is theAmazon'sprofit?

Lecture9Questions

Question 7:

Explain what is financial management,operation management, andpricing management?

Give real life examples that MNCs use these strategies to manage their operating exposure.

Question 8:

For Avon's casein Lecture 9,whatkind ofmanagementstrategies (financial, operating, or pricing) did Avon use to manage its operating exposure?

Question 9:

Nissan produces a car that sells in Japan for 1.8 million. On September 1, the beginning of the model year, the exchange rate is 150:$1. Consequently, Nissan sets the U.S. sticker price at $12,000. By October 1, the exchange rate has dropped to 125:$1. Nissan is upset because it now receives only $12,000 x 125 = 1.5 million per sale.List seven strategies thatare open to Nissan to improve its situation?

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