AmerisourceBergen, Inc. (a U.S. based firm) negotiates a conditional currency call options with a bank to...

 

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AmerisourceBergen, Inc. (a U.S. based firm) negotiates a conditional currency call options with a bank to hedge its accounts payable of 300 million Jamaican dollars due on May 1. AmerisourceBergen, Inc. will only exercise its option on the due date. The terms of the conditional currency call options are as follows: K (exercise price) = $0.0069 per Jamaican dollar, Trigger = $0.0066 per Jamaican dollar, premium = $0.0015 per Jamaican dollar, expiration date= May 1. If the spet rate on the due date, i.e., May 1, is $0.0068 per Jamaican dollar, what is the amount of U.S. dollar that AmerisourceBergen, Inc. expects to pay for its 300 million Jamaican dollars? AmerisourceBergen, Inc. (a U.S. based firm) negotiates a conditional currency call options with a bank to hedge its accounts payable of 300 million Jamaican dollars due on May 1. AmerisourceBergen, Inc. will only exercise its option on the due date. The terms of the conditional currency call options are as follows: K (exercise price) = $0.0069 per Jamaican dollar, Trigger = $0.0066 per Jamaican dollar, premium = $0.0015 per Jamaican dollar, expiration date= May 1. If the spet rate on the due date, i.e., May 1, is $0.0068 per Jamaican dollar, what is the amount of U.S. dollar that AmerisourceBergen, Inc. expects to pay for its 300 million Jamaican dollars?

Answer rating: 100% (QA)

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