2. Call option hedge on payables 2 1. Contingency Graph STEP: 1 of 2 Suppose that Mullen co, a U.S.-based MNC, knows that it will need 300,000 pounds in one year in order to purchase supplles. It is considering a currency call option to hedge this payable. Currency call options on the pound with expiration dates in one year currently have an exercise price of $1.19 and a premium of $0.04. On the following graph, use the blue points (circle symbols) to plot the contingency graph for hedging this payable with a call option, Plot the points from left to right in the order you would Nke them to appear. Line segments will connect automatically, Plot the 3 blue points for the following pound spot rates: $1.15, $1.19, $1.25 Note: The vertical axis measures dollar cash outflows from the hedge, which includes the price paid for pounds and any option premium mapter 11 Assignment Note: The vertical axis measures dollar cash outflows from the hedge, wh 1.26 1.25 + 1.24 + 1.23 1.22+ 1.21 + Dollar Cash Outflows from Hedge (Dollars per Pound) 1.20+ 1.19+ 1.18+ 1.17 1.16+ 1.15+ 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21 1.22 1.23 1.24 Pound Spot Rate in One Year (Dollars per Pound)