Purchase options to hedge its payable position

Assignment Help Financial Management

Reference no: EM131351698

LKL Corporation will need 225,000 Canadian dollars (C$) in 90 days to cover a payable position. Currently, a 90-day call option with an exercise price of $.75 and a premium of $.01 is available. Also, a 90-day put option with an exercise price of $.73 and a premium of $.01 is available. LKL plans to purchase options to hedge its payable position. Assuming that the spot rate in 90 days is $0.67, what is the net amount paid, assuming LKL wishes to minimize its cost?

Reference no: EM131351698

Questions Cloud

Explain the effects of socioeconomic status on health : Explain the Effects of socioeconomic status on health. You must identify a main idea that will become your thesis statement (often answering the question with your reasons is the basis of a strong thesis).

What is project net present value : A project has an initial investment of $1,500,000. If the expected cash inflows from the project are $600,000 in year 1, $342,000 in year 2, $255,000 in year 3, and $375,000 in year 4, what is the project’s payback? If the firm’s hurdle payback rate ..

Do you think that the u.s should have done concerning : What, if anything, do you think that the U.S, should have done concerning the Holocaust? Do you think that the U.S. has the obligation to intervene to protect human rights overseas?Provide at least one reference, cited and referenced in the forma..

Describe the 92nd percentile in terms of standard deviation : Name the percentile of a student whose score is 0.8 standard deviation above the mean.

Purchase options to hedge its payable position : LKL Corporation will need 225,000 Canadian dollars (C$) in 90 days to cover a payable position. Currently, a 90-day call option with an exercise price of $.75 and a premium of $.01 is available. LKL plans to purchase options to hedge its payable posi..

Find the limit above which 90% of the data lies : The mean of a set of normally distributed data is 6, and the standard deviation is 0.35.

Based on its expectations the company enters : A US company expects to pay 2,500,000 Japanese yen 30 days from now. It decides to hedge thee position by buying Japanese yen forward. The current spot rate of the yen is $.0089, while the forward rate is $0.0090. Based on its expectations the compan..

What percent of the data is between 362 and 442 : The mean of a set of normally distributed data is 402, and the standard deviation is 36.

You would need to be paid to walk away from the game : You play a game where if the flip of a fair coin results in heads, you get $1,000; and nothing if it comes up tails. Answer each of the following questions: If you’re risk seeking, what is the amount (specify $ amount using either , =) you would nee..

User Account

All Pages