XYZ plc pays for imports in dollars and has been offered the following quotes for options on the dollar:
Strike price of dollar in pence Call premium Put premium
1 year 2 years 1 year 2 years
66 4.8 10.0 4.5 4.0
67 4.5 9.5 5.1 4.4
a. Using these figures illustrate and evaluate the benefits and costs from the perspective of a multinational company of a range forward or collar arrangement between the multinational company and its banks.