Question: Please answer the question 1. Your small US multinational business forecasts 40,000 Euro expenses to be paid in 6 months. You hedge 100% of the

Please answer the question

1. Your small US multinational business forecasts 40,000 Euro expenses to be paid in 6 months. You hedge 100% of the expenses using a call option with the strike price set at the EUR forward rate of 1.30. (The premium cost of the option is assumed to be $0 for this question). If the actual EUR foreign exchange rate in 6 months is 1.10, then what is the US dollar gain or loss on your hedged exposure?

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