Problemthe premium for a put option to sell ten million, Ask an Expert

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Problem:

The premium for a put option to sell ten million Swiss francs for dollars at $0.66/Sfr is quoted at 2%. The current spot rate is $0.64/Sfr. If the dollar interest rate is 8% and the option is used to hedge a three-month franc exposure,

Required:

Question: What is the per franc cost of the option in terms of the transaction date?

A) $0.0131.

B) $0.0128.

C) $0.0204.

D) $0.0140.

Note: Show all workings.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91148421

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