A us firm is going to pay its swiss supplier sfr 10000 in 6, Ask an Expert

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A U.S. firm is going to pay its Swiss supplier SFr 10,000 in 6 months. The U.S. firm uses a call option on SFr to hedge the foreign exchange exposure for this transaction. The call option will mature in 6 months. Its exercise price is SFr1 = $0.625, and its premium is $ 0.02 per SFr. If 6 months later, the spot rate is SFr 1 = $0.5882, what is the amount of dollars needed for the U.S. firm to obtain SFr 10,000?

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Financial Management, Finance

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