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Question 1203454: Mender Co. will be receiving 500,000 Australian dollars in 180 days. Currently, a 180-day call option with an exercise price of $.68 and a premium of $.02 is available. Also, a 180-day put option with an exercise price of $.66 and a premium of $.02 is available. Mender plans to purchase options to hedge its receivables position. Assuming that the spot rate in 180 days is $.67, what is the amount received from the currency option hedge (after considering the premium paid)?
A. $330,000
B. $332,000
C. $327,000
D. $335,000
Answer by ikleyn(52884)   (Show Source):
You can put this solution on YOUR website! .
This problem is deeply Financial, and even understanding of the used terminology
requires special education in Finance, while this forum is intended to help students in Math.
So, I afraid that you will spend your time for nothing, year after year,
waiting for a qualified response from here.
Therefore, in order for it does not happen, my advise to you is to find another site/forum for help.
We help to solve Finance problems sometime, when we are able to understand major conceptions,
but not in this case.
One of our tutors loves to say that to come to this forum with such problems
is the same as to go to a grocery store to buy hardware.
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