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Your company has purchased currency call option to hedge a 70,000 British pounds payable. The premium is $0.02 and exercise price of the option is
Your company has purchased currency call option to hedge a 70,000 British pounds payable. The premium is $0.02 and exercise price of the option is $0.50. If the spot rate at the time of maturity is $0.85, what is the total amount paid by your corporation. Including the premium, if it acts rationally?( assume option contract specifies 70,000 units of BP)
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