Jones Ltd.. will receive SF2,000,000 in 30 days. Use the following information t

Question

Jones Ltd.. will receive SF2,000,000 in 30 days. Use the following information to determine the total dollar amount received (after accounting for the option premium) if the firm purchases and exercises a put option: SHOW ALL WORK

      Exercise price                                  =        $.61

      Premium                                          =        $.02

      Spot rate                                          =        $.60

      Expected spot rate in 30 days         =        $.56

      30day forward rate                        =        $.62

      A) $630,000.

      B) $610,000.

      C) $600,000.

      D) $590,000.

      E) $580,000.

Explanation / Answer

the total dollar amount received (after accounting for the option premium) if the firm purchases and exercises a put option=SF2,000,000*(Excercise price-Premium)=SF2,000,000*($0.61-$0.02)=$590,000

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