Question: QUESTION 7 6 points Save Answer Firm AAA is located in the U.S.. It has purchase from a Germany firm 1,000,000 worth of product. The

QUESTION 7 6 points Save Answer Firm AAA is located in

QUESTION 7 6 points Save Answer Firm AAA is located in the U.S.. It has purchase from a Germany firm 1,000,000 worth of product. The payable will be processed a year later. Refer to the following for details. The current spot exchange rate is $1.40/euro The one year forward rate is $1.30/euro The Euro zone annual interest rate= 2% The U.S. annual interest rate 3% Call options for euro has a strike price $1.38, premium price is $0.02 Question: The call options for euro has a strike price $1.38, premium price is $0.02. If firm AAA chooses to hedge its transaction exposure using call option, the required amount in dollars to pay off the accounts payable in a year will be how much

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