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You are a U.S. importer and just placed an order of antiques worth 100,000 from a U.K supplier. You owe 100,000 to the U.K seller
You are a U.S. importer and just placed an order of antiques worth 100,000 from a U.K supplier. You owe 100,000 to the U.K seller in one year. You are concerned about the dollar cost of this purchase in one year and decide to hedge your exchange rate risk using options. The current spot exchange rate is $1.45/, and the forward exchange rate is $1.40/. The U.S. interest rate is 2.00%, and the U. interest A. A. call option with a strike price of $1.40/ is available with a premium of $0.10/. A put of $0.08/ you will exercise your options if the future spot rate turns out to be $1.50/. Enter the numeric portion of your
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