A Firm Wants to Use an Option to Hedge 12

question 80

Multiple Choice

A firm wants to use an option to hedge 12.5 million in receivables from New Zealand firms. The premium is $.03. The exercise price is $.55. If the option is exercised, what is the total amount of dollars received (after accounting for the premium paid) ?

• A) $6,875,000
• B) $7,250,000
• C) $7,000,000
• D) $6,500,000
• E) None of these are correct.
• Answer Key

---

Definitions:

Resources Scarcity

A condition where the availability of resources is insufficient to satisfy the demands of the population.

Advanced Practice Nurses

Registered nurses who have obtained advanced training and education, allowing them to provide specialized healthcare services and in some cases prescribe medications.

Informational Responsibility

The obligation to handle, share, and use information in a manner that is accurate, transparent, and respectful of privacy.

Public Relations

The professional practice of managing and guiding perceptions of an organization or individual to the public, often through media and communication strategies.