A firm wants to use a CALL option to hedge CAD 10 million in payables...
70.2K
Verified Solution
Link Copied!
Question
Finance
A firm wants to use a CALL option to hedge CAD 10 million in payables to Canadian firms. The premium is $.02. The exercise price is $1.10 per CAD. At the expiration date, the spot rate is $1.25. What is the total amount of dollars your company has to pay(after accounting for the premium paid)? (think about whether this company want to exercise its call option or not) In your answer, put 2 numbers after decimal place, Dont put $ or comma (,). simply enter, say, 1230456.
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
