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What is the probability that spencer will exercise

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Spencer Corp, a U.S. company is considering a hedge on receivables of 700,000 British pounds. It can buy put options for $.03 per unit and an exercise price of $1.40 per British pound. The 90-day forward rate of the British pound is $1.40. Probability Future Spot Rate10%$1.3530%$1.3760%$1.39

What is the probability that Spencer will exercise the options?

Reference no: EM132041041

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