3) Assume that Smith Corporation must pay 100,000 British pounds in 90 days. A call option...

Question

Question

3) Assume that Smith Corporation must pay 100,000 British pounds in 90 days. A call option exists on British pounds with an e

business finance

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

As British pounds have to be paid in 90 days, buy call option on British pounds.

Amount of dollars paid=100000*(1.60+0.03)=163000

Add a comment

Answer 2

Similar Homework Help Questions

3) Assume that Smith Corporation must pay 100,000 British pounds in 90 days. A call option...

3) Assume that Smith Corporation must pay 100,000 British pounds in 90 days. A call option exists on British pounds with an exercise price of $1.60, a 90-day expiration date, and a premium of $.03. A put option exists on British pounds, with an exercise price of $1.57, a 90-day expiration date, and a premium of $.02. Determine the amount of dollars it will pay, including the amount paid for the option premium if it purchases and exercises an option....
Assume that Smith Corporation will need to purchase 200,000 British pounds in 90 days. A call...

Assume that Smith Corporation will need to purchase 200,000 British pounds in 90 days. A call option exists on British pounds with an exercise price of $1.68, a 90-day expiration date, and a premium of $.03. A put option exists on British pounds, with an exercise price of $1.69, a 90-day expiration date, and a premium of $.03. Smith Corporation plans to purchase options to cover its future payables. It will exercise the option in 90 days (if at all)....
4) Assume that Smith Corporation will receive 100,000 British pounds in 90 days. A call option...

4) Assume that Smith Corporation will receive 100,000 British pounds in 90 days. A call option exists on British pounds with an exercise price of $1.65, a 90-day expiration date, and a premium of $.03. A put option exists on British pounds, with an exercise price of $1.61, a 90-day expiration date, and a premium of $.02. Determine the amount of dollars it will receive, including the amount paid for the option premium if it purchases and exercises an option....

A call option exists on British pounds with an exercise price of $1.70, a 90-day expiration...

A call option exists on British pounds with an exercise price of $1.70, a 90-day expiration date, and a premium of $.03 per unit. A put option exists on British pounds with an exercise price of $1.71, a 90-day expiration date, and a premium of $.035 per unit. You plan to purchase options to cover your future receivables of 300,000 pounds in 90 days. You will exercise the option in 90 days (if at all). You expect the spot rate...
INTERNATIONAL FINANCE- PLEASE WRITE OUT YOUR CALCULATIONS!!! 3) Assume that Smith Corporation will need to purchase...

INTERNATIONAL FINANCE- PLEASE WRITE OUT YOUR CALCULATIONS!!! 3) Assume that Smith Corporation will need to purchase 250,000 British pounds in 90 days. A call option exists on British pounds with an exercise price of S1.70, a 90-day expiration date, and a premium of S.04. A put option exists on British pounds, with an exercise price of S1.69, a 90-day expiration date, and a premium of $.03. Smith Corporation plans to purchase options to cover its future payables. It will exercise...
Malibu, Inc., is a U.S. company that export goods to British. It plans to use put options to hedge receivables of 100,000 pounds in 90 days. Three put options are available that have an expiration da...

Malibu, Inc., is a U.S. company that export goods to British. It plans to use put options to hedge receivables of 100,000 pounds in 90 days. Three put options are available that have an expiration date 90 days from now. Fill in the number of dollars needed to receive for the receivables (including the option premium paid) for each option available under each possible scenari Option A Option B Option C Scenario Spot rate of Probability Exercise price- $1.63 Exercise...

Assume that Co. will need to purchase 100,000 Singapore dollars (SGD) in 180 days. Today’s spot...

Assume that Co. will need to purchase 100,000 Singapore dollars (SGD) in 180 days. Today’s spot rate of the SGD is $.50, and the 180‑day forward rate is $.53. A call option on SGD exists, with an exercise price of $.52, a premium of $.02, and a 180‑day expiration date. A put option on SGD exists, with an exercise price of $.51, a premium of $.02, and a 180‑day expiration date. Company has developed the following probability distribution for the...
Assume that Brian Co. will need to purchase 100,000 Singapore dollars (S$) in 180 days. Today’s...

Assume that Brian Co. will need to purchase 100,000 Singapore dollars (S$) in 180 days. Today’s spot rate of the S$ is $.50, and the 180‑day forward rate is $.53. A call option on S$ exists, with an exercise price of $.52, a premium of $.02, and a 180‑day expiration date. A put option on S$ exists, with an exercise price of $.51, a premium of $.02, and a 180‑day expiration date. Brian has developed the following probability distribution for...
1. Adam buys a put option on British pounds (contract size is £500,000) at a premium...

1. Adam buys a put option on British pounds (contract size is £500,000) at a premium of S0.05/£. The strike price is $1.20/£. (a) Graph the profit/loss on the option contract. (b) What is the break-even price? (a) At what range of spot prices does John make profit? 2. Bank of America buys a call option on euros (contract size is €625,000) at a premium of $0.02 per euro. If the exercise price is $0.98 and the spot price of...

13. The premium on a pound put option is $.03 per unit. The exercise price is...

13. The premium on a pound put option is $.03 per unit. The exercise price is s1.60. The break-even point for the buyer and seller is? (Assume put option are speculators.) zero transactions costs and that the buyer and seller of the 14. You purchase a call option on pounds for a premium of $.03 per unit, with an exercise price of $1.64; the option will not be exercised until the expiration date, if at all. If the spot rate...

3) Assume that Smith Corporation must pay 100,000 British pounds in 90 days. A call option...

Homework Answers