24) The size of a euro call is 125,000. Today, a U.S. importer places an order for...

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24) The size of a euro call is 125,000. Today, a U.S. importer places an order for machine tools that will arrive in Houston in 60 days, when he must pay 4,000,000 to the German exporter. Assume that the price of at-the-money, 60-days, euro calls is $0.01/euro, and the spot rate today is $1.40. How many euro calls would he have to buy to hedge?

26) How much did he save by hedging with calls versus not hedging, if the spot rate is $1.65 when payment is due?

Posted Date: May 11, 2024 03:49 AM

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24) The size of a euro call is 125,000. Today, a U.S. importer places an order for...

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To solve this problem we need to follow these steps 24 Determining the number of euro calls the US i... View the full answer

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