Business, 27.04.2021 15:20 mely2668

On December 1, 2020, Speed Company, a U. S. firm, sold merchandise to Jacqueline Company of Canada for 400,000 Canadian dollars (CAD). Collection of the receivable is due on February 1, 2021. Speed purchased a foreign currency put option with a strike price of $.94 (U. S.) on December 1, 2020. This foreign currency option is designated as a cash flow hedge. Relevant exchange rates follow: Date Spot Rate Option
Premium
December 1, 2018 $0.97 $0.05
December 31, 2018 $0.95 $0.04
February 1, 2019 $0.94 $0.03
Compute the fair value of the foreign currency option at February 1, 2019. A) $7,500.
B) $6,000.
C) $3,000.
D) $1,500.
E) $4,500.
Compute the U. S. dollars received on February 1, 2019. A) $141,000.
B) $142,500.
C) $136,500.
D) $138,000.
E) $145,500.

Answers: 3

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On December 1, 2020, Speed Company, a U. S. firm, sold merchandise to Jacqueline Company of Canada f...

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