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On December 1, 2018, Keenan Company, a U.S. firm, sold merchandise to Velez Company of Canada for 150,000 Canadian dollars (CAD). Collection of the receivable is due on February 1, 2019. Keenan purchased a foreign currency put option with a strike price of $.97 (U.S.) on December 1, 2018. This foreign currency option is designated as a cash flow hedge. Relevant exchange rates follow:
A.
te Spot rate Option premium
B.
cember 1,2018 $0.97 $0.05
C.
cember 31,2018 $0.95 $0.04
D.
bruary1,2019 $0.94 $0.03
E.
mpute the fair value of the foreign currency option at December 1, 2018.