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1. Calculate the upfront cost of a put option that would allow you to sell 1,000,000 Euro in 3 months for US Dollars at an exchange rate of $1.08/1 Euro. The premium is 1.10%. Assume the premium is paid in cash.

2. If the spot exchange rate is $1.10/1 Euro in 3 months, would you exercise the put option? Explain your answer.

3. Calculate the minimum amount of USD that would be received if you exercise the option. What is the maximum amount you could receive?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92713042

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