Business, 25.02.2020 20:58 Swetjyil

A U. S. firm has sold an Italian firm €1,000,000 worth of product. In one year the U. S. firm gets paid. To hedge, the U. S. firm bought put options on the euro with a strike price of $1.65. They paid an option premium $0.01 per euro. If at maturity, the exchange rate is $1.60,a. the firm will realize $1,145,000 on the sale net of the cost of hedging.
b. the firm will realize $1,150,000 on the sale net of the cost of hedging.
c. the firm will realize $1,140,000 on the sale net of the cost of hedging.
d. none of the above

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A U. S. firm has sold an Italian firm €1,000,000 worth of product. In one year the U. S. firm gets p...

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