Suppose That the Exchange Rate Is €1

question 6

Multiple Choice

Suppose that the exchange rate is €1.25 = £1.00.Options (calls and puts) are available on the London exchange in units of €10,000 with strike prices of £0.80 = €1.00.Options (calls and puts) are available on the Frankfurt exchange in units of £10,000 with strike prices of €1.25 = £1.00.For a U.K.firm to hedge a €100,000 payable,

• A)buy 10 call options on the euro with a strike in pounds sterling.
• B)buy 8 put options on the pound with a strike in euro.
• C)sell 10 call options on the euro with a strike in pounds sterling.
• D)buy 10 call options on the euro with a strike in pounds sterling and buy 8 put options on the pound with a strike in euro.

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Definitions:

Performance Appraisal

A regular review of an employee's job performance and overall contribution to an organization.

Behavior-Based Interview

An interviewing technique that focuses on how the interviewee acted in specific situations in the past, on the premise that past behavior is the best predictor of future behavior.

Future Work Performance

Future work performance pertains to an individual's or a group's projected effectiveness, productivity, and accomplishments in their professional tasks going forward.

Performance Appraisal

A formal assessment process where an employee's job performance and productivity are evaluated by their supervisor.