What is the total amount paid by the corporation

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Reference no: EM132005910

1. P&G corporation has purchased currency call options to hedge a 66,500 euro payable. The premium is $.05 (per unit of euro) and the exercise price of the option is $1.55. If the spot rate at the time of maturity is $1.51, what is the total amount paid by the corporation if it acts rationally(after accounting for the premium paid)?

$104,000

$100,000

$103,740

$102,400

$101,415

2. A share of the ADR of a German firm represents six share of that firm's stock that is traded on a German stock exchange. The share price of the firm was 20 euros when the German market closed. As the U.S. market opens, the euro is worth $1.34; what is the no arbitrage price of the share of the ADR?

$26.80.

$160.80.

$108.75.

$21.75.

Reference no: EM132005910

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