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Your small US multinational business forecasts 60,000 Euro in costs for tools from Europe in...

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Finance

Your small US multinational business forecasts 60,000 Euro in costs for tools from Europe in 6 months. You hedge 100% of the purchase using call options with the strike price set at the EUR forward rate of 1.20. (The premium cost of the call options is assumed to be zero for this question). If the actual EUR foreign exchange rate in 6 months is 1.35, then what would be the US dollar gain or loss on your hedge (step 2)?

$9,000 gain

$7,500 gain

$0 gain or loss

($9,000) loss

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