Business, 02.04.2020 01:35 ababot8339

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 U. K. firm to hedge a €100,000 receivable,

A. buy 10 call options on the euro with a strike in pounds sterling and buy 8 put options on the pound with a strike in euro.

b. sell 10 call options on the euro with a strike in pounds sterling.

c. buy 8 put options on the pound with a strike in euro.

d. buy 10 call options on the euro with a strike in pounds sterling

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Suppose that the exchange rate is €1.25 = £1.00.Options (calls and puts) are available on the London...

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