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What is the fair value of the put option on December

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Reference no: EM132510224

Question - On December 1, 20x1 Henry made a sale to a customer in France; the sales price was 100,000 Euros. The customer had until March 1, 20x2 to pay. On the same day, December 1, 20x1, Henry paid $1,000 for a put option to sell Euros at a strike price of $1.10 per Euro on March 1, 20x2; $1.10 per Euro was also the spot rate on December 1, 20x1. On December 31, 20x1, the spot rate was $1.20 per Euro and the put option's fair market value was $0.02 per Euro.

Part A) What is the fair value of the put option on December 1, 20x1

A. $200

B. $10,000

C. $1000

D. $500

Part B) What is the fair value of the put option on December 31, 20x1?

A. $0

B. $1500

C. $10,000

D. $2000

Reference no: EM132510224

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