2.Answer the following Multiple choice question. Only choose the correct option. (1 mark each)

-A British MNC has purchased currency call options to hedge a 70,000 US dollar payable. The premium is 0.015 and the exercise price of the option is 0.54. If the spot rate at the time of maturity is 0.59, what is the total amount paid by the corporation if it acts rationally?

1 point

$37,800

37,800

38,850

36,750

-If you have a _____ in a foreign currency in the future, you can purchase a ____option to sell the foreign currency at a specific price on a given date.

1 point

a. receivable ; call

b. receivable ; put

c. payable; put

d. payable; call

e. both (b) & (d)

-An option gives the holder the right, but not the obligation, to buy or sell a given quantity of an asset in the future at prices agreed upon today.

1 point

True

False