How much dollar cash the company will receive

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Reference no: EM131012057

Crown Co. is expecting to receive 100,000 British pounds in one year. Crown expects the spot rate of British pound will decrease in a year, so it decides to avoid exchange rate risk by buying a put option. The strike price of put option is $1.53 per pound. The premium on put option is $.03 per pound. If the spot rate at the end of the year is $1.48 per pound, then how much dollar cash the company will receive? If the spot rate at the end of the year is $1.55 per pound, then how much dollar cash the company will receive?

Reference no: EM131012057

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