Ask Question
7 October, 00:40

You are the treasurer of Arizona Corp. and must decide how to hedge (if at all) future receivables of 350,000 Australian dollars (A$) 180 days from now. Put options are available for a premium of $.02 per unit and an exercise price of $.50 per Australian dollar. The forecasted spot rate of the Australian dollar in 180 days is:

+1
Answers (1)
  1. 7 October, 02:13
    0
    50%

    Explanation:

    The computation of the probability for put option will be exercised is shown below:

    She will exercise at the time when the exercise price i. e $.50 is bigger than the future spot price i. e (20% + 30% = 50%)

    So in this case the probability should be 50%

    Hence, the correct answer is option c.

    All other information which is given is not relevant. Hence, ignored it
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “You are the treasurer of Arizona Corp. and must decide how to hedge (if at all) future receivables of 350,000 Australian dollars (A$) 180 ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers