An Australian company imports goods from Germany and expects the payment of EUR 250,000 after 60 days. Therefore, the company purchased a Call option with a strike price of AUD 1.25/EUR and a premium of 5% of the option value. At the maturity of the option, the market price is AUD/EUR=0.85. Specify the decision of the Australian company. O a. To not hedge the risk O b. To purchase the amount in EUR from the market O c To exercise the option O d. To search for another option contract
An Australian company imports goods from Germany and expects the payment of EUR 250,000 after 60 days. Therefore, the company purchased a Call option with a strike price of AUD 1.25/EUR and a premium of 5% of the option value. At the maturity of the option, the market price is AUD/EUR=0.85. Specify the decision of the Australian company. O a. To not hedge the risk O b. To purchase the amount in EUR from the market O c To exercise the option O d. To search for another option contract
Chapter5: Currency Derivatives
Section: Chapter Questions
Problem 19QA
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![An Australian company imports goods from Germany and expects the payment of EUR 250,000 after 60 days. Therefore, the company purchased a
Call option with a strike price of AUD 1.25/EUR and a premium of 5% of the option value. At the maturity of the option, the market price is
AUD/EUR=0.85. Specify the decision of the Australian company.
O a. To not hedge the risk
O b. To purchase the amount in EUR from the market
O c To exercise the option
O d. To search for another option contract](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F09fd9442-b654-465f-80fd-fd60173ba4b5%2F3e0a0557-3f45-4518-b499-e8dd5f94eeaf%2Fg64l8h_processed.jpeg&w=3840&q=75)
Transcribed Image Text:An Australian company imports goods from Germany and expects the payment of EUR 250,000 after 60 days. Therefore, the company purchased a
Call option with a strike price of AUD 1.25/EUR and a premium of 5% of the option value. At the maturity of the option, the market price is
AUD/EUR=0.85. Specify the decision of the Australian company.
O a. To not hedge the risk
O b. To purchase the amount in EUR from the market
O c To exercise the option
O d. To search for another option contract
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