Firms Payoff Assignment | Homework For You

An American firm has just bought merchandise from a British firm for GBP 50,000 on terms of 90-day payment. This firm has purchased a 3-month call option on GBP 50,000 at a strike price of $1.7 per pound and a premium cost of $0.02 per pound. On the day the option matures, the spot exchange rate is $1.8 per pound. What will be the payoff for the American firm?Homework For You
Currently, the EARS/USD = 0.016. Suppose the Argentine government expects significant inflation over the next year. The expectation is that inflation will be significantly larger than the expected inflation in the U.S. What do you expect to happen to the corresponding F365, ARS/USD over the next year? Explain your reasoning. Get Finance homework help today

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