6Kiko Peleh. Kiko Peleh writes a put option onJapanese yen with a strike price of $0.008000=¥1.00(¥125.00 = $1.00) at a premium of 0.0080¢ per yenand with an expiration date six months from now.The option is for ¥12,500,000. What is Kiko's profitor loss at maturity if the ending spot rates are ¥110,¥115, ¥120, V125, V130, V135, and ¥140 per dollar?

The put option refers to the right to sell the underlying asset at the strike price before or on the…

Answered: 6 Kiko Peleh. Kiko Peleh writes a put…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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M2
(a) Suppose a trader takes a position on June 5th 2021, in one September 2021 EURO (EUR) future contract at USD1.3094/EUR. The trader holds the position until the last day of trading when the spot price is USD1.2939/EUR. This will be the final settlement price because of price convergence. The trader has EUR125,000 for this investment. (i) If the trader had a long position and he was a speculator, calculate his profit or loss for the position above. (ii) If the trader had a short position and he was a speculator, calculate his profit or loss for the position above. (iii) If the trader had a long position and he was a hedger, calculate his profit or loss for the position above. (iv) If the trader had a short position and he was a hedger, calculate his profit or loss for the position above. (b) Discuss factors that you would consider in evaluating the political risk associated before making FDI in a foreign country.
R3
A trader purchased an at the money 1 year OTC put option on the DAX index for a cost of Eur 10000. What is the traders minimum potential credit Exposure to the counter part over the term of the trade
13. The USDJPY spot price is 115.018 and the one month forward is 115.046. A one month expiration European style call option with a strike price of 115.046 is trading at 4¥ and a put option with the same parameters is trading at 5¥. If we purchase the call and sell the put sketch the payoff of this position at expiry (the expiration date) over the range 114.900 to 115.140. If we were going to hedge an exposure to the Yen should we use the option position or the forward? Justify your answer.
June 2021 Mexican peso futures contract has a price of $0.05197 per MXN. You believe the spot price in June will be $0.05831 per MXN. MXN500,000 is the contract size of one MXN contract. Required: What speculative position would you enter into to attempt to profit from your beliefs? Calculate your anticipated profits, assuming you take a position in three contracts. What is the size of your profit (loss) if the futures price is indeed an unbiased predictor of the future spot price and this price materializes?
Doctor Dumpkins is bullish on the British pound so he sells a one-month put for $0.03. The strike price of the call is $1.24. On the expiration day, the spot price of the British pound is $1.27. Calculate the break-even price, the option payoff at expiration, and the net profit at expiration.
A6)
Three months ago, you sold a put option contract on Swiss franc with a strike price of $.60/SF and an option price of $.0060 per SF. Contract size is 10,000 SF. The option expires today when the value of Swiss franc is $.625. What is your total profit or loss on your investment? A. -$310 B. -$60 C. $0 D. $60
If you put on the futures position from 2 at a price of 0.043 $/peso, and if the peso appreciates from the spot rate of 0.045 $/peso by 15% in the next 6 months, what will be the total value of your position (the payable plus the future) in 6 months (again, this should be a negative number)?
A two-year European call option is written on a stock whose current price is $20. The stock will pay a dividend of $1 three months from now and another $1 one and half years from now. The strike price is $18, and the riskfree interest rate is 5%. Then the tightest lower bound for the call option value is, 6. $1.8976 $1.535 $1.194 a. b. с. d. $1.7976. Six-month call options with strike prices of $25 and $30 cost $4 and $3 respectively. Then the maximum possible gain and loss from a bear spread 7. formed using the two calls are respectively $10 and infinity $10 and $10 $1 and $4 $4 and $1 $10 and $5 а. b. c. d. е. Twelve-month European put options with strike prices of $35, $30, and $25 cost $7, $3.5, and $2 respectively. Then the maximum possible gain and loss from a butterfly spread formed using the three puts are respectively 8. a. $4.5 and infinity b. $4.5 and $0.5 $0.5 and $4.5 $3 and $0.5 $10 and $4.5 c. d. е. 9. A three-month call with a strike price of $20 costs $1. A three-month…
Today's price of Microsoft (MSFT) is $150 per share. A retail investor purchases an at-the-money European put option on MSFT with a maturity of one year. She pays a premium of $14.11. The c.c. risk-free interest rate is one percent. What is the potentiality value of the option? Round your answer to three decimal places.

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