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What is the fair value of the call option on october

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Reference no: EM133164396

Question - On October 31, 2013, Pointers Philippines took delivery from a British firm of inventory costing 1,450,000 Euros. Payment is due on January 31, 2014. At the same time, Pointers paid P16, 500 cash to acquire a 90-day call option for 1,450,000 Euros.

 

October 31, 2013

December 31, 2013

January 31, 2014

Strike Price

P12.60

P12.60

P12.60

Spot Rate

12.61

12.62

12. 64

Forward Rate

12.72

12.77

12.78

Fair Value of the Call Option

?

34,000

?

Required -

1. What is the fair value of the call option on October 31, 2013?

2. What is the Fair value of the call option on January 31, 2014?

3. What is the Foreign exchange gain due to change in intrinsic value on January 31, 2014?

Reference no: EM133164396

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