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A+ haaaaaalalaaaaaaaaaaa i Data Table dee Þ.80 (Click on the icon to import the table into a spreadsheet.) Option Put (US$/Si

O c. the future spot rate proves correct.) Since Cece expects the Singapore dollar to appreciate versus the U.S. dollar, sheCece Cao in Jakarta. Cece Cao trades currencies for Sumatra Funds in Jakarta. She focuses nearly all of her time and attentioCece Cao in Jakarta. Cece Cao trades currencies for Sumatra Funds in Jakarta. She focuses nearly all of her time and attentio​

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Answer #1

a]

A call option will gain in value if the price of the underlying asset increases.

She expects the S$ to rise in value.

Cece should buy a call on the S$

b]

breakeven price of long call option = strike price + premium paid

breakeven price of long call option = $0.6500 + $0.00046 = $0.65046

c]

If the spot price is higher than the option strike price at expiration :

gross profit = (spot price - option strike price)

net profit = gross profit - premium paid

gross profit = $0.7005 - $0.6500 = $0.0505

net profit = $0.0505 - $0.00046 = $0.05004

d]

If the spot price is higher than the option strike price at expiration :

gross profit = (spot price - option strike price)

net profit = gross profit - premium paid

gross profit = $0.8004 - $0.6500 = $0.1504

net profit = $0.1504 - $0.00046 = $0.14994

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