A Canadian Exporter Will Receive $1

question 43

Multiple Choice

A Canadian exporter will receive $1.5 million USD in September,and decides to buy a put option on the USD for September delivery.Suppose a put option on the USD with a September expiration and a strike price of 1.275 USD/CADtrades for 0.0115CAD per put on 1 USD.If,by the September expiration date,the USD has appreciated to 1.250 USD/CAD,how much did the firm lose (in CAD) from hedging with the option,compared to remaining unhedged?

• A)$0
• B)$54,750
• C)$20,250
• D)$17,250
• E)$37,500

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Definitions:

Discriminative Stimulus

A stimulus in the presence of which a particular response will be reinforced in operant conditioning.

Asking Questions

The act of seeking information through verbal or written inquiries to increase understanding or clarify uncertainties.

Negative Reinforcement

A type of learning where a behavior is strengthened because it is followed by the removal of an unpleasant stimulus.

Positive Reinforcement

A method in behaviorism that involves the addition of a rewarding stimulus following a desired behavior, with the aim of increasing the likelihood of that behavior being repeated.