On January 1, 2015, Nathan Co paid P6,000 cash to acquire a putforeign exchange option for FC37,500 which expires at the end ofthe year. The option hedges 2015's forecasted sales of FC37,500.Nathan's fiscal year ends every October 31.non-derivative contract1/1/15 10/31/15 12/31/15Spot rate (market price)Strike price (exercise price)Fair value of put option5) Determine the intrinsic value at inception of the option contract.a. P 12,750b. P 4,125P1.45 P1.20P1.301.401.401.406,000 25,250c. P 6,000d. P 0

The intrinsic value of the option refers to the amount by which the option is in-the-money at the…

Answered: ative contract On January 1, 2015,…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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