REFERENCE: Ref.09_04 on December 1,2007,Keenan Company,a U.S.firm,sold Merchandise to Velez Company of Company

Multiple Choice

REFERENCE: Ref.09_04
On December 1,2007,Keenan Company,a U.S.firm,sold merchandise to Velez Company of Spain for 150,000 euro.Payment is due on February 1,2008.Keenan entered into a forward exchange contract on December 1,2007,to deliver 150,000 euro on February 1,2008 for $.97.Keenan chose to use a foreign currency option to hedge this foreign currency asset designated as a cash flow hedge.Relevant exchange rates follow:
-Compute the value of the foreign currency option at December 31,2007.

A) $6,000.
B) $4,500.
C) $3,000.
D) $7,500.
E) $1,500.