Question: AmerisourceBergen, Inc. (a U.S. based firm) negotiates a conditional currency call options with a bank to hedge its accounts payable of 300 million Jamaican

AmerisourceBergen, Inc. (a U.S. based firm) negotiates a conditional currency call options

AmerisourceBergen, Inc. (a U.S. based firm) negotiates a conditional currency call options with a bank to hedge its accounts payable of 300 million Jamaican dollars due on May 1. AmerisourceBergen, Inc. will only exercise its option on the due date. The terms of the conditional currency call options are as follows: K (exercise price) = $0.0069 per Jamaican dollar, Trigger = $0.0066 per Jamaican dollar, premium = $0.0015 per Jamaican dollar, expiration date= May 1. If the spet rate on the due date, i.e., May 1, is $0.0068 per Jamaican dollar, what is the amount of U.S. dollar that AmerisourceBergen, Inc. expects to pay for its 300 million Jamaican dollars?

Step by Step Solution

★★★★★

3.39 Rating (161 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

To calculate the amount of US dollars that AmerisourceBergen Inc expects to pay for its 300 million ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Addressable advertising is more expensive than traditional network advertising but may offer savings when advertising to a specific target audience. Use the table provided by consultant Bill Harvey...

Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...

Find x, and x2. 3 -5 X4 - 11 - %3D -4 - 1 X2 -16 X = X2 =0

The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...

Need help with these homework questions struggling with the answers. thanks. Graylon, Inc., based in Washington, exports products to a German firm and will receive payment of 200,000 in three months....

These two questions is what I will present, and please read through the case first then answer these two questions. Thank you! 1. Suppose you expected the dollar to appreciate in value by 10% against...

The premium for September 19th call option on Canadian dollar is $0.04, and the strike price is $0.80. Assume that on September 19 the spot rate for the Canadian dollar rose to $0.92. What is the USD...

Hi there I need help answering ASSIGNMENT 1 ONLY by Friday afternoon. I have attached the study pack to help answer the question. Thanks! FIN4802 ASSIGNMENTS ASSIGNMENT 01 Due date: 13 May 2016...

Looking for assistance in Finance HW..... I ONLY Need the FORMULASin the function ribbon (for the answers that I already have, which are attached below) Please advise if you can assist and provide...

I would like to know if someone can assist with inputting the formulas into the Excel spreadsheets..... Answers are provided, however, the formulas were omitted. Week 9 Chapter 21: Problems 3(a-e),...

It's a case study of GM ( read corp 2.docx). Want to know the answer of Q1, Q2, Q3, Q4 ( from corp.docx) General Motors Stephane Bello, an analyst in the Capital Markets group at General Motors (GM),...

Read the following topics and write a short answers: Real rate of return,

C for the constant o f integration. ( 8 1 + t 2 i + t e t 2 j + 9 t 2 k ) d t Your answer cannot b e understood o r graded. More Information Need Help? Operations Functions Symbols Relations Sets...

Darten Restaurants owns and operates several different restaurant chains including Red Snapper and the Olive Grove. The company is considering opening a number of new units in Ohio. There are ten...

The Cutting Department of Lasso Company has the following production and cost data for August. Materials are entered at the beginning of the process. Conversion costs are incurred uniformly during...

In American roulette, the wheel has the 38 numbers, 00, 0, 1, 2, . . ., 34, 35, and 36, marked on equally spaced slots. If a player bets $1 on a number and wins, then the player keeps the dollar and...

The Cash account of Guard Dog Security Systems reported a balance of $2,540 at December 31, 2018. There were outstanding checks totaling $400 and a December 31 deposit in transit of $100. The bank...

Bea Jones (age 32) moved from Texas to Florida in December 2013. She lives at 654 Ocean Way, Gulfport, FL 33707. Beas Social Security number is 466787359 and she is single. Her earnings and income...

An index rate of interest charged by banks to their credit-worthy customers is referred to as the:Group of answer choicesfederal funds rate.cost of funds.prime rate.

Assume the subsidiary's functional currency is the euro. What is the translation gain or loss for 2014?LO 1 a. $128,000 loss b. $134,000 loss c. $128,000 gain d. $134,000 gain Use the following...

As part of the acquisition agreement, Parma Corporation agrees to pay the former shareholders of Stow Company $0.50 in cash for every dollar of EBITDA above $5,500,000 reported at the end of the...

The following information is taken from the financial records of Jackson City at December 31, 2014: Total fund balances-governmental funds$ 51,000,000 Total net position-enterprise funds12,000,000...

Shea Company has 100,000 shares of 6%, $50 par value, cumulative preferred stock. In 2018, no dividends were declared on preferred stock. In 2019, Shea had a profitable year and decided to pay...

RVR Enterprises shows net income of $100,000 for 2019 and retained earnings of $500,000 on its December 31, 2019 balance sheet. During the year, RVR declared and paid $60,000 in dividends. What was...

Travis Corporation expected to pay its stockholders a dividend in January 2020. The cash dividend of $75,000 was declared on December 31, 2019. Required: What is the appropriate journal entry to...