The existing spot rate of the Canadian dollar is $0.82/C$. The premium on a Canadian dollar call option is $0.04. The exercise price is $0.81/C$. The option will be exercised on the expiration date if at all. If the spot rate on the expiration date is $0.80, the profit (if any) as a percent of the initial investment (the premium paid) is:
a. 0% b. 100% c. - 100% d. 50%
As expiry price is less than strike price call will not be exercised and the premium will be lost
Hence, Profit %=-100%
The existing spot rate of the Canadian dollar is $0.82/C$. The premium on a Canadian dollar...
15. The existing spot rate of the Canadian dollar is s.82. The premium on a Canadian dolar call option 1s $$.04. The exercise price is $.81. The option will be exercised on the expiration date if at all. If the spot rate on the expiration date is $.87, the profit as a percent of the initial investment (the premium paid) 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...
Q1: If Jasim purchase a put option on Canadian dollar from Sara for a premium of € 0.03, with an exercise price of € 0.42. The option will not be exercised until the expiration date, if at all. If the spot rate on the expiration date is € 0.37. a) What is the net profit for Jasim and Sara per unit? (1 mark) SZERE- ---ODDELEEEEEEEEEE -OOOOOOOOOOOOOOOOOOOOOOOOO SEBEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE b) If you know that one option contract represents 20000 units, what is...
The current spot exchange rate between U.S. dollar and euro is $1.20/€ and a June 2020 call option on euro with a strike price of $1.21/€ commands a premium of $0.015/€. What is the intrinsic value of this option? What is the profit/loss if the option is exercised when the spot rate is $1.23/€ if the going interest U.S. interest rate is 2%?
4. You purchase a put option on Swiss francs for a premium of $.05, with an exercise price of $.50. The option will not be exercised until the expiration date, if at all. If the spot rate on the expiration date is $.58, how much is the payoff of this long option? And your profit? (And also, please draw the payoff diagram to a long put option holder, optional, for extra credits). (Answer: -$0.05; 0)
110. A U.S. corporation has purchased currency put options to hedge a 100,000 Canadian dollar (C$) receivable. The premium is $.02 per unit and the exercise price of the option is $.94. If the spot rate at the time of maturity is $.99, what is the net amount received by the corporation if it acts rationally? a. $92,000. b. $97,000. c. $96,000. d. $94,000. 111. A U.S. corporation has purchased currency call options to hedge a ₤70,000 payable. The premium...
IBM sells a call option on euros (contract size is €600,000) at a premium of $0.02 per euro. If the exercise price is $1.44/€ and the spot price of the euro at date of expiration is $1.45/€, A. Will this option be exercised, that is, is in-the-money or out-of-the-money? Why? (2 points) B. What is IBM’s profit (or loss) on the call option? (3 points)
Consider a European call option on €62,500 with an exercise price of $1.50/€. You pay an option premium of $0.10/€ for the call option today. a. If the $-€ spot exchange rate is $1.62/€ on the contract expiration date, would you exercise the call option (buy € at the exercise price at expiration)? What would be the option payoff and profit? b. If the $-€ spot exchange rate is $1.45/€ on the contract expiration date, would you exercise the call...
QUESTION 4 Spot rate is $1.68. Net profit or loss per unit is: 1.00000 points QUESTION 5 This question and the following three questions use this information. One year ago, you sold a put option on 100,000 euros with an expiration date of one year. You received a premium on the put option of $.04 per unit. The exercise price was $1.22. Assume that one year ago, the spot rate of the euro was $1.20, the one-year forward rate...
Canadian Dollar: Spot and Forward (C$/$) Euro: Spot and forward ($/€) Mid rates Bid Ask Mid rates Bid Ask spot 1.2645 1.2639 1.2651 1.2390 1.2387 1.2393 Forward 3-week 23 27 19 15 3-month 135 128 155 146 7a. How much $100 will cost you in Canadian Dollar and Euro? (Hint: you are buying USD). 7b. What are 3-week and 3-month forward bid and ask rate for Canadian Dollar and Euro? 7c. Based on information above, what are the profit margin...