Viner Co. considers purchasing a put option contract on Swiss francs; the option has an exercise price of $.72 and a premium of $.02. The company has developed the following probability distribu own forecasts of when hedging with put options. LE tion for the spot rate of the Swiss franc in six months: $.71 (30 percent probability), $.74 (40 percent probability), $.76 (30 percent probability). The expected dollar cash flows to be received from purchasing a put option on Swiss francs are shown in Exhibit 11.6. The second column lists the possible spot rates that may (according to Viner's projections) occur in six months; the third column gives the option premium, which remains the same regardless of the future spot rate. The fourth column shows the amount to be received per unit as a result of owning the put options. If the future spot rate is $.71 (first row of the exhibit), the put option will be exercised at the exercise price of $.72. If the spot rate is more than $.72 in six months (rows 2 and 3) then Viner Co. will not exercise the option; instead it will sell the Swiss francs at the prevailing spot rate. Column 5 shows the cash received per unit, which adjusts the fig- ures in column 4 by subtracting the premium paid per unit for the put option. Column 6 shows the amount of dollars to be received, which is equal to cash received per unit (shown in column 5) mul- tiplied by the amount of units (200,000 Swiss francs)