1. A put option on Japanese yen is written with a strike price of ¥95.00/$. Which spot exchange rate will maximize your profit if you choose to exercise the option?
a. ¥85.00/$
b. ¥90.00/$
c. ¥100.00/$
d. ¥115.00/$
And why?
2. An advantage of netting of a multinational corporation and its subsidiaries is that it:
a. increases foreign exchange risk.
b. decreases the total volume of inter-subsidiary fund flows.
c. increases the total amount of currency conversion.
d. decreases the number of employees.
And why?