A Japanese Exporter Has a €1,000,000 Receivable Due in One

question 66

Multiple Choice

A Japanese exporter has a €1,000,000 receivable due in one year.Estimate the cost today of an options strategy that will eliminate exchange rate risk. $\begin{array}{llll}\text { Listed Options }\\&\text { Strike } & \text { Puts } &\text { Calls } \\\text { Euro€62,500 } & \$ 1.25=€ 1.0 C & \$ 0.0075 \text { per } € & \$ 0.01^{ per€ } \\\text { Yen?12,500,000 } & \$ 1.00=¥ 10 C & \$ 0.0075 \text { per } ¥ 100 & 0.010^{ per ¥10 }\end{array}$

• A)$20,000
• B)$5,000
• C)$12,500
• D)none of the options

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Digital System

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