Suppose That the Exchange Rate Is €1

question 5

Multiple Choice

Suppose that the exchange rate is €1.25 = £1.00.Options (calls and puts) are available on the Philadelphia exchange in units of €10,000 with strike prices of $1.60/€1.00.Options (calls and puts) are available on the Philadelphia exchange in units of £10,000 with strike prices of $2.00/£1.00.For a U.S.firm to hedge a €100,000 payable,

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

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Definitions:

Physiological Needs

Fundamental physical requirements for human survival, such as food, water, shelter, and sleep, considered as the base of Maslow's hierarchy of needs.

Maslow's Hierarchy

A theory in psychology proposed by Abraham Maslow in his 1943 paper, detailing a five-tier model of human needs, from basic (physiological) to advanced (self-actualization).

Leadership

The act of guiding or influencing a group towards the achievement of goals, involving vision, inspiration, and direction.

Influencing

Refers to the capacity or power to affect others' views, behavior, or decisions, often used within leadership, marketing, and social interaction contexts to achieve desired outcomes.