Suppose that the exchange rate is 125 100 Options calls and puts are available

Suppose that the exchange rate is 125 100 options

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72. Suppose that the exchange rate is €1.25 = 1.00. Options (calls and puts) are available on the Philadelphia exchange in units of €10,000 with strike prices of $1.60/€1.00.Options (calls and puts) are available on the Philadelphia exchange in units of 10,000 with strike prices of $2.00/1.00.For a U.S. firm to hedge a €100,000 receivable, A. Buy 10 call options on the euro with a strike in dollars.B. Buy 10 put options on the pound with a strike in dollars.C. Sell 10 call options on the euro with a strike in dollars.D. Sell 8 put options on the pound with a strike in dollars.E. Both a) and b)F. Both c) and d)73. Suppose that $2 = 1, $1.60 = €1, and the cross exchange rate is €1.25 = 1.00. If you own a call option on 10,000 with a strike price of $1.50, you would exercise this option at maturity if: 74. Suppose that the exchange rate is €1.25 = 1.00. Options (calls and puts) are available on the London exchange in units of €10,000 with strike prices of 0.80 = €1.00.Options (calls and puts) are available on the Frankfurt exchange in units of 10,000 with strike prices of €1.25 = 1.00.For an Italian firm to hedge a 100,000 payable, 8-36
Chapter 08 - Management of Transaction Exposure75. Suppose that the exchange rate is €1.25 = 1.00. Options (calls and puts) are available on the London exchange in units of €10,000 with strike prices of 0.80 = €1.00. Options (calls and puts) are available on the Frankfurt exchange in units of 10,000 with strike prices of €1.25 = 1.00. For a French firm to hedge a 100,000 receivable, 76. A minorcurrency is A. Anything other than the "big six": U.S. dollar, British pound, Japanese yen, euro, Canadian dollar, and Swiss franc.B. Any currency that trades at less than one U.S. dollarC. Any currency that is less than a $20 denomination.D. None of the above

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