Question: CORRECT ANSWER IS THERE. JUST NEED HELP WITH CALCULATIONS! THANK YOU 9) A U.S. importer has to pay Euros 400,000 in 1-year. The importer decides

CORRECT ANSWER IS THERE. JUST NEED HELP WITH CALCULATIONS! THANK YOU

CORRECT ANSWER IS THERE. JUST NEED HELP WITH CALCULATIONS!

THANK YOU

9) A U.S. importer has to pay Euros 400,000 in 1-year. The importer decides to hedge foreign exchange risk using a 100% call option hedge. Call options on Euros with an exercise price of $1.10 /Euros and maturity of 1-year are available today at a premium of $0.03 /Euros. If the spot rate in 1 year turned out to be $1.25 /Euros, how much U.S. dollars would be needed to payoff the Euros payable (also taking into account option premiums)? Ans: $452,000 10) A U.S. importer has to pay Euros 400,000 in 1-year. The importer decides to hedge foreign exchange risk using a 100% call option hedge. Call options on Euros with an exercise price of $1.10/ Euros and maturity of 1 -year are available today at a premium of $0.03 /Euros. If the spot rate in 1 year turned out to be $1.05/ Euros, how much U.S. dollars would be needed to payoff the Euros payable (also taking into account option premiums)? Ans: $432,000

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