Question: ) A US multinational company will pay 1,000,000 to a German supplier in April, it is now December. Their exposure is the rise in the

) A US multinational company will pay 1,000,000 to a German supplier in April, it is now December. Their exposure is the rise in the value of the or the fall in the value of the $. The company want a better understanding of call options. Please assess the options below and what the company should do if the below exchange rates actually occur in April. Information April options with a strike price of 1.3400 (US$/1) are available at a premium of 4.25 US cents per . Page 2 American College Dublin, BA in International Business, IB401 International Finance, Semester 1 - 2021/2022 Required: Calculate the call options for the US company using the following table and assuming the

spot rate at expiry in April is: (i) 1.2950 (ii) 1.4400 (iii) 1.4950 Spot Rate at Expiry 1.2950 1.4400 1.4950

Exercise the Option?

Cost of Buying 1m

Cost of Premium

Total Cost

Effective Exchange Rate

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