A) Assume you are an exporter and you want to sell USD that you have received as export remittance. The bank quotes a price of 65.10 / 65.12 for USDINR. At what price can you sell one unit of USD? and Why? B) Sultan sells a USD call option at strike of 65.8 and receives a premium of INR 0.3. What would be the breakeven point for the transaction? C) Assume that price of a USDINR call option is quoted as INR 0.25 / 0.27 (bid price / ask price). Given this quote, at what price could a company buy the call option? and Why?
A) Assume you are an exporter and you want to sell USD that you have received as export remittance. The bank quotes a price of 65.10 / 65.12 for USDINR. At what price can you sell one unit of USD? and Why? B) Sultan sells a USD call option at strike of 65.8 and receives a premium of INR 0.3. What would be the breakeven point for the transaction? C) Assume that price of a USDINR call option is quoted as INR 0.25 / 0.27 (bid price / ask price). Given this quote, at what price could a company buy the call option? and Why?
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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A) Assume you are an exporter and you want to sell USD that you have received as export remittance. The bank quotes a price of 65.10 / 65.12 for USDINR. At what price can you sell one unit of USD? and Why?
B) Sultan sells a USD call option at strike of 65.8 and receives a premium of INR 0.3. What would be the breakeven point for the transaction?
C) Assume that price of a USDINR call option is quoted as INR 0.25 / 0.27 (bid price / ask price). Given this quote, at what price could a company buy the call option? and Why?
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