Company XYZ makes widgets. They will have 500 widgets to sell in 6 months. The current price is $60 per widget. The company's cost to create each widget is $40. The company decides to insure its position. The company has the following two options to hedge its risks: enter into a forward contract with a forward price of $61.80 buy a 6 -month $60-strike European put option for a premium of $5.25 The risk-free rate is 6% convertible semiannually. For what range of prices in 6 months would profit for option (1) be greater than the profit for option (2)? A. 56.39 to oo B. 0 to 67.05 C. 67.05 to oo D. 0 to 67.21 E. 67.21 to oo

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Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.