Centene Corporation (a U.S. based firm) negotiates a conditional currency_put options with a bank to hedge...

 

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Centene Corporation (a U.S. based firm) negotiates a conditional currency_put options with a bank to hedge its accounts receivable of 35 million Philippine pesos due on June 1. Centene Corporation will only exercise the option on the due date. The terms of the conditional currency put options are as follows: K (exercise price) = $0.018 per Philippine peso, Trigger = $0.019 per Philippine peso, premium = $0.0045 per Philippine peso, expiration date = June 1. If the spot rate on the due date, i.e., June 1, is $0.017 per Philippine peso, what is the amount of U.S. dollar that Centene Corporation expects to receive for its 35 million Philippine pesos? Centene Corporation (a U.S. based firm) negotiates a conditional currency_put options with a bank to hedge its accounts receivable of 35 million Philippine pesos due on June 1. Centene Corporation will only exercise the option on the due date. The terms of the conditional currency put options are as follows: K (exercise price) = $0.018 per Philippine peso, Trigger = $0.019 per Philippine peso, premium = $0.0045 per Philippine peso, expiration date = June 1. If the spot rate on the due date, i.e., June 1, is $0.017 per Philippine peso, what is the amount of U.S. dollar that Centene Corporation expects to receive for its 35 million Philippine pesos?

Answer rating: 100% (QA)

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