# FIN4604 exam2

### 34 terms by ousschal

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B. -\$1,562

e. \$1.57; \$1.57

b. -\$.02

### 18. You purchase a put option on Swiss francs for a premium of \$.02, with an exercise price of \$.61. The option will not be exercised until the expiration date, if at all. If the spot rate on the expiration date is \$.58, your net profit per unit is:

e. None of the above.

c. \$.01

### 20. You are a speculator who sells a put option on Canadian dollars for a premium of \$.03 per unit, with an exercise price of \$.86. The option will not be exercised until the expiration date, if at all. If the spot rate of the Canadian dollar is \$.78 on the expiration date, your net profit per unit is:

e. None of the above.

84,000

\$95,000

d. \$47,500

a. \$15,385

a. \$1,024,000.

e. 10.63%

. \$1.0022

b. 12.35%

a. \$1,020,500.

e. 5.59%

a. \$1.5415

a. \$1.47

c. \$240,000

d. \$236,127

### Use the following information to calculate the dollar cost of using a money market hedge to hedge 200,000 pounds of payables due in 180 days. Assume the firm has no excess cash. Assume the spot rate of the pound is \$2.02, the 180-day forward rate is \$2.00, the British interest rate is 5%, and the U.S. interest rate is 4% over the 180- day period.

. e. None of the above

590,000

\$96,914

98,769

### Your company will receive C\$600,000 in 90 days. The 90-day forward rate for Canadian dollar is \$.80. If you use a forward hedge, you will receive:

480,000 in 90 days

c. \$1,106,000

e. \$344,000

e. \$.174

b. \$97,000.

d. \$36,400

d. \$47,500

b. -\$2500

b. 4%

d. \$1639.30

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