Suppose Yuki writes a naked 90 day call for 10,000 NZD at a strike price of NZD/JPYk = 78.53. She obtains a premium of 4 JPY for each NZD for writing the option. Note: the premium is NOT for JPY-cents. Assume zero interest rates.   At expiration, JPY/NZD = 0.01218. Which of the following is closest to Yuki's overall P/L from writing this option?   Group of answer choices   35,718 JPY   4281 JPY   -35,718 JPY   40,000 JPY   -4281 JPY

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Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.