Register
A U.S. corporation has purchased currency call options to hedge a ₤70,000 payable. The premium is $.02 [.05] and the exercise price of the option is $.50 [$1.50]. If the spot rate at the time of maturity
168k views
5 votes
A U.S. corporation has purchased currency call options to hedge a ₤70,000 payable. The premium is $.02 [.05] and the exercise price of the option is $.50 [$1.50]. If the spot rate at the time of maturity is $.65 [$1.65], what is the total amount paid by the corporation if it acts rationally?

User Saunderl
by
5.1k points

1 Answer

4 votes

Answer:

$36,400.

Step-by-step explanation:

70,000 *.5 = 35,000

70,000 *.02 = 1400

35,000 + 1400 = 36,400

User SQiShER
by
5.2k points
Ask a Question
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

5.7m questions

7.5m answers

Other Questions

_____ reminds customers and clients that they made a good choice in selecting a company with which to do business, or it reminds them of the good qualities of their purchase.​
On august 1 the darius co. purchased a photocopy machine for $8,000. the estimated annual depreciation on the machine is $1,680. if the company prepares annual financial statements on december 31, the
When president obama was elected, the u.s. economy was in trouble, and has slid into a recession. consumer spending was low and getting worse. in an effort to stop the decline, president obama proposed
The current market price for good y is above the equilibrium price, and then the price of a subsitute good, x, increases. the demand curve for good y shifts as a result. what is the likely outcome of the
How do i figure out a months ending capital
Link Copied!