What would you do and what do you need to do

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Reference no: EM133617075

Problem: Your firm purchased equipment from a British company. Total cost was £50,000 (in 30 days). The pound is expected to appreciate against $ substantially in 30 days. Let's suppose it would be $1.6/£ in 30 days. You decide to use option to hedge against the exchange rate risk. After you bought the option, the spot exchange rate in 30 days turns out to be lower than the strike price. What would you do and what do you need to do?

Reference no: EM133617075

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