Suppose you have a 1,200,000 US dollar payable coming due in June and that the spot today is .98 US/CDN. You get a strike of .98 US and you are dealing with the PHLX. Suppose you are deciding whether or not to hedge out the foreign exchange risk. The size of the Canadian dollar contract on the PHLX is 50,000 Canadian dollars per contract. The option price is listed as 1.00 for the June put on Canadian dollars and .90 on the June call How many contracts will you have to buy to hedge the entire amount? A. 24 В. 25 С. 23 D. 500

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