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Wesfarmers has developed the following probability distribution for the spot rate of the Indian rupee (IN) against the Australian dollar

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Wesfarmers has developed the following probability distribution for the spot rate of the Indian rupee (IN) against the Australian dollar (A$) in six months to buy call options on INR1.79 million with an exercise price of A$0.3118 and a premium of A$0.0347.

 -A$0.2153 [39 per cent probability]
-A$0.4976 [38 per cent probability]
-A$0.5192 [(100-39-38) per cent probability]

 

What is the expected value of the cash to be paid in A$ for the call option hedge? (enter the whole number without sign and symbol)

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Financial Institutions Management A Risk Management Approach

Financial Institutions Management A Risk Management Approach

ISBN: 978-0071051590

8th edition

Authors: Marcia Cornett, Patricia McGraw, Anthony Saunders

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Posted Date: September 03, 2023 04:54:18
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