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A U.S. corporation has purchased currency call options to hedge a 70,000 pound payable. The premium is $.02 and the exercise price of the option is $.50. If the spot rate at the time of maturity is $.65, what is the total amount paid by the corporation if it acts rationally? (Please ignore the time value of premium)

33,600
46,900
36,400
44,100

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The solution provides the correct answer with supporting calculations to determine the total amount paid by the corporation if it acts rationally.

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A U.S. corporation has purchased currency call options to hedge a 70,000 pound payable. The premium is $.02 and the exercise price of the option is $.50. ...

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