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A bank has proposed a strategy with a collar to its business customer. The latter...

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Accounting

A bank has proposed a strategy with a collar to its business customer. The latter wants to buy CHF against USD. The bank used the forward rate CHF/USD 1.1142, and a premium of 120 points to calculate the break-even rate of the two options that make up the collar. At what price will the company buy its CHF?
A. The company will buy the CHF at best under the call exercise rate 1.1022, and at worst at the put strike price 1.1262.
B. The company will buy the CHF at best under the put exercise rate 1.1022, and at worst under the call strike price 1.1262.
C. The bank will sell the CHF at a maximum price of 1.1262 under the put and it will buy them at the minimum price of 1.1022 under the call.
D. The bank will sell the CHF at the floor price 1.1022 under the call and it will buy them at the ceiling price 1.1262 under the put.

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