Net amount paid to minimize its cost

Reference no: EM13139048

FAB Corporation will need 200,000 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. FAB plans to purchase options to hedge its payable position. Assuming that the spot rate in 90 days is $.71, what is the net amount paid, assuming FAB wishes to minimize its cost ?

Reference no: EM13139048

Questions Cloud

What is the main cause of bit errors on this digital link : What is the main cause of bit errors on this digital link? At the receiver, what is the rule that is used to decide whether to output a 1 or a 0?

New testament and its modern interpretation : How do you understand the facts when reading the bible, that one must be aware of numerous differences in the literature, the historical time, and the expectations of the reader in the twenty first century?

Prepare journal entry to record the exercise : Prepare a Lease Amortization schedule for the entire lease. Prepare the journal entry to record the exercise of the Bargain Purchase Option at the end of the lease term.

What is the investment portion remaining : In 1991, Barbara purchased a single life annuity for $250,000 that would pay her $25,000 per year for life beginning in 2002. Barbara's life expectancy from 2002 forward on which the payments were based is 25 years.

Net amount paid to minimize its cost : Also, a 90-day put option with an exercise price of $.73 and a premium of $.01 is available. FAB plans to purchase options to hedge its payable position. Assuming that the spot rate in 90 days is $.71, what is the net amount paid, assuming FAB wis..

Acrostic poem for rainbow trout : Acrostic Poem for rainbow trout

Find probability of the sample mean that exceeds given value : Tthe probability distribution of each of his readings had a mean of 128 and a standard devation of 9. what is the probability of the sample mean that exceeds 140?

Calculate the net present value of the helicopter purchase : Bar T Ranches, Inc. is considering the purchase of a new helicopter for $400,000. The firm's old helicopter has a book value of $90,000, but can only be sold for $60,000. It was being depreciated at the rate of $13,500 per year for four more years..

Find out the voltage level required : A microwave system requires a +4-dBm audio level to provide 100% modulation. Determine the voltage level required if this is a 600 ohm audio system.

User Account

All Pages