A UK company has purchased currency put options to hedge a 100,000 Canadian dollar (C$) receivable. The premium is £0.02 and the exercise price of the option is £0.50. If the spot rate at the time of maturity is £0.51, what is the net amount received by the corporation if it acts rationally?

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The Answer of A UK company has purchased currency put options to hedge a 100,000 Canadian dollar (C$) receivable. The premium is £0.02 and the exercise price of the option is £0.50. If the spot rate at the time of maturity is £0.51, what is the net amount received by the corporation if it acts rationally?

A UK Company Has Purchased Currency Put Options to Hedge