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What the future dollar cost of meeting the chf obligation

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You plan to visit Geneva, Switzerland in three months to attend an international business conference. You expect to incur the total cost of CHF5,000 for lodging, meals, and transportation during your stay. As of today, the spot exchange rate is USD0.6000/CHF and the three-month forward rate is USD0.6300/CHF. You can buy the three-month call option on CHF with the exercise rate of USD0.6400/CHF for the premium of USD0.05 per CHF. Assume that your expected future spot exchange rate is the same as the forward rate.

Problem 1: The future dollar cost of meeting this CHF obligation if you decide to hedge using a forward contract is USD

Reference no: EM133000156

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