Cachita Haynes. Cachita Haynes works as a currency speculator for Vatic Capital of Los Angeles. Her latest speculative position is to profit from her expectation that the U.S. dollar will rise significantly against the Japanese yen The current spot rate is 121.00-$1.00. She must choose between the following 90-day options on the Japanese yen a. Should Cachita buy a put on yen or a call on yen? b. What is Cachita's breakeven price on the option purchased in part (a)? c. Using your answer from part (a), what is Cachita's gross profit and net profit (including premium) if the spot rate at the end of 90 days is ¥140.00 = $1.00? a. Should Cachita buy a put on yen or a call on yen? (Select the best choice below) OA. Cachita should buy a call on yen to profit from the rise of the dollar (the fall of the yen) O B. Cachita should buy a call on yen to profit from the fall of the dollar (the rise of the yen) OC. Cachita should buy a put on yen to profit from the fall of the dollar (the rise of the yen). O D. Cachita should buy a put on yen to profit from the rise of the dollar (the fall of the yen) Data table (Click on the following icon in order to copy its contents into a spreadsheet) Strike Price V124 $1.00 V124 $1.00 Premium 50.00003 per V $0.00046 per V Option Put on yen Call on yen D Print Done - X

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Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.