1. Bae Inc. (a U.S. based firm) negotiates a conditional currency call options with Community Bank to hedge its accounts payable of 3 million Austrailian dollars due on October 31. Bae Inc. will only exercise its option on the due date. The terms of the conditional currency call options are as follows: K (exercise price) = $0.68 per Australian dollar, Trigger = $0.66 per Australian dollar, premium = $0.02 per Australian dollar, expiration date = October 31. If the spot rate on the due date, i.e., October 31, is $0.65 per Australian dollar, what is the amount of U.S. dollar Bae Inc. expects to pay for its 3 million Australian dollars?

A. 1.95 million

B. 2.10 million

C. 2.01 million

D. 2.04 million

2. Johnson & Johnson, Inc., a U.S.-based MNC, will need 15 million Brazilian Reals on December 1. It is now September 1. Johnson & Johnson has negotiated a non-deliverable forward contract with its bank. The reference rate is the Brazilian Real's closing exchange rate (in $) quoted by Brazil's central bank in 90 days. The Brazilian Real's spot rate today is $.22. If the rate quoted by Brazil's central bank on December 1 is $.26, Johnson will ____ $____.

Question options:

A. pay; 60,000

B. pay; 600,000

C. be paid; 600,000

D.be paid; 60,000

3. JCrew Inc. (a U.S. based firm) negotiates a conditional currency put options with a bank to hedge its accounts receivable of 2 million euros due on October 31. JCrew Inc. will only exercise its option on the due date. The terms of the conditional currency put options are as follows: K (exercise price) = $1.12 per euro, Trigger = $1.14 per euro, premium = $0.03 per euro, expiration date = October 31. If the spot rate on the due date, i.e., October 31, is $1.13 per euro, what is the amount of U.S. dollar JCrew expects to receive for its 2 million euros?

Question options:

A. $2.20 million

B. $2.26 million

C. $2.24 million

D. $2.18 million