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A firm wants to use an option to hedge 125 million in

A firm wants to use an option to hedge 12.5 million in receivables from New Zealand firms. The premium is $.03. The exercise price is $.55. If the option is exercised, what is the total amount of dollars received (after accounting for the premium paid)?

a. $6,875,000
b. $7,250,000
c. $7,000,000
d. $6,500,000
e. none of the above

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Business Management: A firm wants to use an option to hedge 125 million in

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