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
Helen [10]
3 years ago
13

Suppose that instead of using a forward contract, you consider using options. A one-year call option to buy euros at a strike pr

ice of $1.25/€ is trading for $0.10/€. Similarly a one year put option to sell euros at a strike price of $1.25/€ is trading for $0.10/€. To hedge the risk of your profits, should you buy or sell the call or the put?
Business
1 answer:
Stells [14]3 years ago
5 0

Answer:

Sell the put option. The put option is better and advantageous .

Explanation:

The call option is trading far below the strike price and poses risk. The price may not go up to $1.25 and hence not advisable. The put option is better as we stand to make a profit margin ($1.15 / Euro) if it sells the put at he strike price immediately. Given that the difference is high, it is unlikely that the price will move against us and we shall exercise the option as soon as the margin starts reducing.

You might be interested in
According to Lee, by developing collaborative relationships with suppliers and customers, employing postponement, building a dep
BigorU [14]

Answer:

4. Agility and Alignment

Explanation:

Based on the information provided within the question it can be said that these factors will help a company foster Agility and Alignment. This means that the company will be able to able to rapidly adapt to the inevitable changes that occur by changing up it's business configuration instantly, as well as being completely organized in every aspect of the business structure.

3 0
3 years ago
g The low cost of labor in other countries around the globe is a factor that business must consider because they are impacted by
postnew [5]

Answer:

The low cost of labor in other countries around the globe is a factor that business must consider because they are impacted by:

the high cost of domestic labor.

Explanation:

An entity's ability to be globally competitive in the face of foreign manufacturers with low cost of labor is not helped by the high cost of domestic labor.  The cost of direct labor forms part of the computations for the cost of a product and its pricing.  Cheaper imports are more affordable to consumers than local products, thus causing consumers to prefer imports to domestic products.

4 0
3 years ago
Two special methods vital to marketing researchers are __________ and __________.
Anton [14]

Two special methods vital to marketing researches are <u>sampling</u> and <u>statistical inference.</u>

hope this helps!

5 0
2 years ago
Which of the following has the largest impact on opportunity cost?
Mrrafil [7]
Consumer wants because the want of people are very greedy and needs to be decreased but it’s not so it’s at its largest
6 0
2 years ago
Read 2 more answers
A sole priorietorship is a business that is owned by a number of people?<br><br> True or false?
miskamm [114]
The answer is "false"
3 0
3 years ago
Other questions:
  • What are three risks your company might face if it participates in global trade?
    10·1 answer
  • What name is given to the price a dealer pays when purchasing a car from a manufacturer? A. Market price B. MSRP C. Book value.
    7·2 answers
  • John deposited $2,000, at the end of every month for 2 years in a savings account. if the account paid 6% interest, compounded m
    8·1 answer
  • An indifference curve shows all 1. possible equilibrium positions on an indifference map. 2. equilibrium combinations of two pro
    10·1 answer
  • Martinez Company’s relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its ave
    10·1 answer
  • The tax rate as a percent, r, charged on an item can be determined using the formula – 1 = r, where c is the final cost of the i
    9·2 answers
  • Worth Company reported the following year-end information: beginning work in process inventory, $180,000; cost of goods manufact
    10·1 answer
  • What steps can be taken to build a sound financial reputation
    7·2 answers
  • Following are the accounts and balances from the adjusted trial balance of stark company
    7·1 answer
  • Write a short report on ethical business dilemmas, and give examples of ethical dilemmas faced by businesses.
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!