Weekly Assignment 7 PMBAO. See Schedule of Exams and Weekly Assignments for Due Dates. Note: There is a lot of learning in this assignment. My exposition is intentionally kept at a minimum. Draw upon Chapters 10 (for the strategies) and the first 6 to 7 pages of chapter 7 (for the options part). Due to your import of wine from France, you have an account pavable in three months. You desire to hedge this account using the options market. The following info (including the table below) are available to you. Calculate the outcome of this option if you end up executing it at the end of the three months. Today's date - March 1, 2020 Spot rate on the above date = $1.1450/euro Account payable amount = euro 48,000.00 Commercial interest rate on US dollar = 6 percent The calls and puts premiums in the table below are in percent. . Calls Puts May May Strike Price (S/euro) 1.135 1.140 7.160 2.25 7.98 1.10 1.34 7.57 1.84 Review the following questions. When you are ready, enter your responses on Canvas (in the tab Quizzes, WA07). Thank you. 1. Do you buy a May call or a May put (insert call or put) 2. If you select the May strike price of $1,14 and execute this options, what would be you outcome? (Drop S sign in your answer): Thank you. 1. Do you buy a May call or a May put (insert call or put) 2. If you select the May strike price of S1,14 and execute this options, what would be your outcome? (Drop Ssign in your answer): 3. If you select the May strike price of S1,14, what would be your options premium cost in USD at the point of entering into the options? (Drop S sign in your answer). 4. Assuming that you execute this option, which May strike price is the best? Enter your selected strike price in dollar (drop the sign in your answer). 5. If at the end of the 3rd month the spot rate would be $1.12, what do you do with this option? a. I will execute it b. I will let it expire c. I will be indifferent d. None of the answers in this group are relevant