Venice inc is a european firm expecting 40000000 in three, Ask an Expert

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Venice Inc. is a European firm expecting $40,000,000 in three months. Options are available with the following quotes:

Call option at 3% premium and put option 4% premium. Current rate is $1.10/€ and exercise price is $1.15/€ .

What is the effective cost of options if annual borrowing/deposit rates in Europe are 3%/2.5% APR and 2.75%/2.45% in the U.S.

A. Euro 1,320,000

B. Euro 1,773,200

C. Euro 1,380,000

D. Euro 1,840,000

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92090633

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