Answer to Question #64084 in Other Economics for hamza
• Call option on NZD 1 million at exercise price of USD 0.6200/NZD: a 1.5% premium
• Put option on NZD 1 million at exercise price of USD 0.6205/NZD: a 1% premium
• WACC for Millenium is at 10%
Based on the information above, which option should the company choose? How much is the total cost to the company if they used option market to hedge this transaction exposure. Assume the spot rate three months from now is USD 0.6300/NZD.
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