Including the amount paid for the option premium

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Reference no: EM131511718

Assume that Smith Corporation will need to purchase 200,000 British pounds in 90 days. A call option exists on British pounds with an exercise price of $1.68, a 90-day expiration date, and a premium of $.04. A put option exists on British pounds, with an exercise price of $1.69, a 90-day expiration date, and a premium of $.02. Determine the amount of dollars it will pay for the payables, including the amount paid for the option premium.

a. $338,000. b. $342,000. c. $344,000. d. $360,000.

Reference no: EM131511718

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