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What is the expected value of the cash to be received

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Reference no: EM132966392

Viner Co., an Australian company, has developed the following probability distribution for the spot rate of the Chinese yuan (CNY) against the Australian dollar (A$) in six months to buy put options on CNY1.36 million with an exercise price of A$0.3306 and a premium of A$0.0369.

A$0.2593 [32 per cent probability]
A$0.4142 [27 per cent probability]
A$0.5390 [(100-32-27) per cent probability]

Problem 1: What is the expected value of the cash to be received in A$ from the put option hedge?

Reference no: EM132966392

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