A Canadian Exporter Will Receive $10 Million USD in September,and

question 63

Multiple Choice

A Canadian exporter will receive $10 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 1.25 USD/CADtrades for 0.0115CAD per put on 1 USD.If,by the September expiration date,the USD has depreciated to 1.26 USD/CAD,how much did the firm lose (in CAD) from hedging with the option,compared to remaining unhedged?

• A)-$51,508
• B)-$63,492
• C)-$115,000
• D)$0
• E)-$15,000

---

Definitions:

Bootlegger

An individual who illegally manufactures, sells, or transports alcoholic beverages.

AITP

Association for Information Technology Professionals, a professional group focused on technology management and education.

Computer Clocks

Internal timing devices within a computer that synchronize the operations of its components.

Club Sponsor

An entity or individual that provides financial or material support to a club or team, often in exchange for advertising or promotional benefits.