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Homework answers / question archive / Spectrum (a USA based company) has purchased currency put options to hedge a $100,000 Canadian dollar ($CAD) receivable

Spectrum (a USA based company) has purchased currency put options to hedge a $100,000 Canadian dollar ($CAD) receivable

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Spectrum (a USA based company) has purchased currency put options to hedge a $100,000 Canadian dollar ($CAD) receivable. The exercise price of the option is $0.75 and The premium is $0.01. The spot rate at the time of maturity is $0.85. What is the net amount received by the Spectrum if it acts rationally?

Option 1

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2.93 USD

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