a. Complete the worksheet and determine the net profit per unit to Reska, Inc., for each possible future spot rate. Use a minus sign to enter loss values, if any. If the answer is zero, enter "O". Round your answers to three decimal places. Call Put $0.90 Value of Euro at Option Expiration $1.05 $1.50 $2.00 Net $ $ $ b. Determine the break-even points of the long straddle. What are the break-even points of a short straddle using these options? Round your answers to three decimal places. Lower break-even point (long straddle): $ Higher break-even point (long straddle): $ Lower break-even point (short straddle): $ Higher break-even point (short straddle): $
a. Complete the worksheet and determine the net profit per unit to Reska, Inc., for each possible future spot rate. Use a minus sign to enter loss values, if any. If the answer is zero, enter "O". Round your answers to three decimal places. Call Put $0.90 Value of Euro at Option Expiration $1.05 $1.50 $2.00 Net $ $ $ b. Determine the break-even points of the long straddle. What are the break-even points of a short straddle using these options? Round your answers to three decimal places. Lower break-even point (long straddle): $ Higher break-even point (long straddle): $ Lower break-even point (short straddle): $ Higher break-even point (short straddle): $
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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Transcribed Image Text:Reska, Inc., has constructed a long euro straddle. A call option on euros with an exercise price of $1.20 has a premium of $0.017 per unit. A euro put option has a premium of
$0.010 per unit. Some possible euro values at option expiration are shown in the table below.
a. Complete the worksheet and determine the net profit per unit to Reska, Inc., for each possible future spot rate. Use a minus sign to enter loss values, if any. If the
answer is zero, enter "0". Round your answers to three decimal places.
Call
Put
Net
$
$
$
$0.90
$
Value of Euro at Option Expiration
$1.05
$1.50
$
$
$
$
$
$2.00
b. Determine the break-even points of the long straddle. What are the break-even points of a short straddle using these options? Round your answers to three decimal
places.
Lower break-even point (long straddle): $
Higher break-even point (long straddle): $
Lower break-even point (short straddle): $
Higher break-even point (short straddle): $
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