A U.S. company, Polar Bear Inc, wants.To use an option to hedge 12.5 million NZD (New Zealand dollars) in receivables

A U.S. company, Polar Bear Inc, wants.To use an option to hedge 12.5 million NZD (New Zealand dollars) in receivables

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A U.S. company, Polar Bear Inc, wants.To use an option to hedge 12.5 million NZD (New Zealand dollars) in receivables
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A U.S. company, Polar Bear Inc, wants.To use an option to hedge 12.5 million NZD (New Zealand dollars) in receivables from New Zealand firms.
What type of option (put or call on NZD) does Polar Bear Inc need to buy?
 
The premium on the option is $.03 (meaning, in long hand, that the option premium is 0.03 USD per NZD). The exercise price is $.55 (meaning, in long hand, that the exercise price is 0.55 USD per NZD).

What is the total (net) amount of U.S. dollars received (after accounting for the premium paid) by Polar Bear Inc?

Expert Answer:

Answer rating: 100% (QA)

To hedge its receivables from New Zealand firms Polar Bear Inc needs to buy
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