Johanna International Mercantile Corporation has made a $15 million investment in a stamping mill located in northern

Question:

Johanna International Mercantile has made a $15 million investment in a stamping mill located in northern Germany and fears a substantial decline in the Euro's spot price from $1.56 to $1.50, lowering the value of the firm's capital investment. Johanna's principal U.S. bank advises the firm to use an appropriate option contract to help reduce Johanna's risk of loss. What currency option contract would you recommend? Explain why the contract you selected would help to reduce the firm’s currency risk .

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...