A us corporation has purchased currency call options to, Financial Management

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A us corporation has purchased currency call options to

Question

A U.S. corporation has purchased currency call options to hedge a 70,000 pound payable. The premium is $.02 and the exercise price of the option is $.50.

If the spot rate at the time of maturity is $.65, what is the total amount paid by the corporation if it acts rationally?

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Financial Management: A us corporation has purchased currency call options to

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Financial Management: A us corporation has purchased currency call options to

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