(Answered) A japanese exporter has a euro1000000 receivable due in one

Finance

A Japanese EXPORTER has a €1,000,000 receivable due in one year.

Listed Options	Strike	Puts	Calls
€62,500	$1.25 = €1.00	$0.0085 per €	$0.02 per €
¥12,500,000	$1.00 = ¥100	$0.0085 per ¥100	$0.02 per ¥100

(a) Detail the hedging strategy with options.

(b) Estimate the cost today of an options strategy that will eliminate exchange rate risk.

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