On November 1, 2013, Word Inc. paid P45,000 to acquire call foreign exchange option for HK$90,000.The...

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On November 1, 2013, Word Inc. paid P45,000 to acquire call foreign exchange option for HK$90,000.The option is acquired to hedge the 2013 anticipated purchase of merchandise for HK$90,000. The option expires on March 31, 2014. Spot Rate Fair Value of Option Strike Price 11/1/2013 P3.46 4,500 3.47 12/31/2013 P3.40 5,050 3.47 At what amount must the option be presented as of December 31, 2013? 3/31/2014 P3.39 7,200 3.47 On November 1, 2013, Word Inc. paid P45,000 to acquire call foreign exchange option for HK$90,000.The option is acquired to hedge the 2013 anticipated purchase of merchandise for HK$90,000. The option expires on March 31, 2014. Spot Rate Fair Value of Option Strike Price 11/1/2013 P3.46 4,500 3.47 12/31/2013 P3.40 5,050 3.47 At what amount must the option be presented as of December 31, 2013? 3/31/2014 P3.39 7,200 3.47

Answer rating: 100% (QA)

To determine the amount at which the option must be presented as of December 31 2013 we need to calc... View the full answer