A U.S. corporation has purchased currency call options to hedge a ₤70,000 payable. The premium is $.02 [.05] and the exercise price of the option is $.50 [$1.50]. If the spot rate at the time of maturity is $.65 [$1.65], what is the total amount paid by the corporation if it acts rationally?

Respuesta :

Answer:

$36,400.

Explanation:

70,000 *.5 = 35,000

70,000 *.02 = 1400

35,000 + 1400 = 36,400