Question

An importer based in India has a large payment to make in EUR after 2 months. To reduce exchange rate risk, the firm buys a European Call Option with a strike price of ₹91. At maturity, the spot rate is ₹94. What is the result of the option strategy?

A The option expires worthless
B The importer makes a profit of ₹3 per EUR
C The exporter loses ₹3
D Importer pays at market rate
E Option is exercised and importer gains ₹3
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