Business, 24.04.2020 17:17 catuchaljean1623

Salmon Flavored Gelato Corporation, located in the United States, has a note payable obligation of CDN$10 million payable in one year to a fishing firm in Vancouver, Canada. The current spot rate is CDN$1.25=US$1.00 and the one year forward rate is CDN1.281/$1.00. The annual interest rate is 2.5 percent in Canada and 5 percent in the United States. SFG can also buy a one-year call option on $CDN at the strike price of US$0.80 per CDN$ for a premium of US$0.03 per CDN$. Assume that the forward rate is the best predictor of the future spot rate . What is the maximum dollar cost of meeting this obligation using the option hedge is

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Salmon Flavored Gelato Corporation, located in the United States, has a note payable obligation of C...

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