1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
tensa zangetsu [6.8K]
3 years ago
9

A U.S. corporation has purchased currency put options to hedge a 100,000 Canadian dollar (C$) receivable. The premium is $.02 pe

r unit and the exercise price of the option is $.94. If the spot rate at the time of maturity is $.99, what is the net amount received by the corporation if it acts rationally?
Business
1 answer:
LuckyWell [14K]3 years ago
3 0

Answer:

$97,000      

Explanation:

Data provided in the question:

Receivable amount = 100,000 Canadian dollar

Premium per unit = $0.02

Exercise price of put option = $0.94

Spot rate at maturity = $0.99

Now,

Dollars received from selling Canadian dollars in the spot market

= Receivables amount  × Spot rate

= $100,000 × $0.99

= $99,000

Premium paid for options = Receivable amount  × Premium per unit

= $100,000 × $0.02

= $2000

Therefore,

The net amount received by the corporation if it acts rationally

= Dollars received from selling Canadian dollars - Premium paid

= $99,000 - $2000

= $97,000      

You might be interested in
One thousand adults live in Milltown. Every day, they all leave work at 4:30 p.m., arrive home at exactly 5:00 p.m., and go to b
sweet-ann [11.9K]

Answer:

B) clustered near 5:00 p.m.

Explanation:

Based on the information given the Calls that will be made by the fundraisers which are Alpha, Beta, and Charlie will tend to be clustered near 5:00 p.m reason been that before the fundraisers can get a donation, they have to call Milltown's residents after they arrived home from work but before they go to bed which means that if the fundraisers arrive home at exactly 5:00 p.m and go to bed at 9:00 p.m the Calls that will be made by the fundraisers will tend to be clustered near 5:00 p.m which is the exact time they arrived home since we were told that they have to make the call after they get home from work but before they go to bed.

3 0
3 years ago
Bank deposits help the nation’s economy by
allochka39001 [22]

Bank deposits help the nation’s economy by giving banks the money to loan to other people and to invest. When people make deposits into a bank, the bank has more money to lend other epople when they come make a withdraw, need a loan for personal or business use or to invest in stocks and bonds to grow the company and their weath. Banks run on the money poeple deposit into them.

7 0
3 years ago
Read 2 more answers
Item5 1.25 points eBookPrintReferencesCheck my workCheck My Work button is now enabledItem 5 Exercise 2-12 Computing Predetermin
Law Incorporation [45]

Answer:

Follows are the solution to the given points:

Explanation:

 In point 1:

The pre-determined overhead rate value:

= (\frac{654,000}{155,000})+4.40 \\\\= 4.21+4.40\\\\= \$ 8.61 / MH

In point 2:

Calculating the total manufacturing cost:

\text{Direct material} \to 390\\\\\text{Direct labor}  \to  230\\\\\text{Manufacturing overhead} (36 \times 8.61)  \to 309.96\\\\\text{Total manufacturing cost}\to 929.96

In point 3:

The unit product cost:

= \frac{929.96}{60}\\\\ = \$15.49 / unit

In point 4:

Calculating the selling price per unit:

= \$15.49+(\$15.49 \times  130\%)\\\\ =\$15.49 + 20.137 \\\\ = \$35.627 \approx \$36 / unit

3 0
3 years ago
A large software manufacturer attempts to lock in customers by making it difficult for them to substitute their software with on
SSSSS [86.1K]

Answer:

D. Switching cost strategy

Explanation:

The software manufacturer has incorporated the use of switching cost strategy by making it difficult for customers to substitute their software product for another.

Switching costs: it is also known as switching barrier. This is a the cost incurred by the customer as a result of changing brands, product, services or suppliers.

The higher the cost of switching; the lesser a customer would be willing to switch between brands, the lower the switching cost; the higher the customer would be willing to switch between brands.

Switching cost includes:

• Psychological cost: This is the cost of a customer deciding whether the new product or services would be better than the old product

• Effort-based cost: This refers to the effort a customer will put in while switching brands such as the paperwork involved.

• Time cost: The amount of time used while a customer is switching product

Strategies used by firms to discourage its customers from switching

1. Charging a high cancellation fee for service cancellations.

2. Adopting a lengthy cancellation process for service cancellations.

3. Requiring significant paperwork for service cancellations.

5 0
3 years ago
If government officials break up a natural monopoly into four smaller firms, thena. the average cost of production will increase
PtichkaEL [24]

Answer:

The answer is letter A.

Explanation:

The average cost of production will increase. Because a monopoly firm is firm that operates in a monopoly market. Monopoly market is a market structure that has only one firm in the market and many buyers.

5 0
3 years ago
Other questions:
  • A situation in which machines and equipment do most of the work is known as
    5·1 answer
  • Suppose the price of hot wings is $10, the price of beer is $1, and the consumer’s income is $50. In addition, suppose the consu
    15·1 answer
  • 5. Common resources versus private goods Spring is here, and Ginny and her uncle would like to go fishing for the weekend in New
    15·1 answer
  • The adjusting entry to record accrued revenue a.differs from the journal entry to record revenue on account. b.includes a debit
    15·1 answer
  • There is no advantage for politicians who wish to utilize social media as a powerful communication tool. True or False?
    11·1 answer
  • supose you invested 70% of your wealth in the market portfolio and the remainder of your wealth in the shares in the law firm. W
    5·1 answer
  • Process costing and job order costing both________.
    10·1 answer
  • How is an interest group different than a political party?
    11·1 answer
  • _____ is a combined automated machines, robots, and materials handling system that is controlled by a single computer.
    10·1 answer
  • If a country engages in international trade to gain access to natural resources, they
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!