23. Assume that a speculator purchases a put option on British pounds (with a strike price of $1.5 for $.05 per unit. A pound option represents 31,250 units. Assume that at the time of t purchase, the spot rate of the pound is $1.51 and continually rises to $1.62 by the expirati date. The highest net profit possible for the speculator based on the information above is: A) $1,562.50. B) -$1,562.50. C) -$1,250.00. D) -$625.00.
23. Assume that a speculator purchases a put option on British pounds (with a strike price of $1.5 for $.05 per unit. A pound option represents 31,250 units. Assume that at the time of t purchase, the spot rate of the pound is $1.51 and continually rises to $1.62 by the expirati date. The highest net profit possible for the speculator based on the information above is: A) $1,562.50. B) -$1,562.50. C) -$1,250.00. D) -$625.00.
Chapter5: Currency Derivatives
Section: Chapter Questions
Problem 3BIC
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