A US Corporation Has Purchased Currency Put Options to Hedge a a 100,000

question 39

Multiple Choice

A U.S. corporation has purchased currency put options to hedge a 100,000 Canadian dollar (C$) receivable. The premium is $.01 and the exercise price of the option is $.75. If the spot rate at the time of maturity is $.85, what is the net amount received by the corporation if it acts rationally?

• A) $74,000.
• B) $84,000.
• C) $75,000.
• D) $85,000.

Recognize the application and implications of single-period inventory models.

Comprehend different inventory systems and terminology used in inventory management.

Understand the relationship between present value, future value, and time period.

Differentiate between simple interest and compound interest.

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