Cece Cao in Jakarta. Cece Cao trades currencies for Sumatra Funds in Jakarta. She focuses nearly all of her time and attention on the U.S. dollar/Singapore dollar ($/S$) crossrate. The current spot rate is $0.6000/S$. After considerable study, she has concluded that the Singapore dollar will appreciate versus the U.S. dollar in the coming 90 days,probably to about $0.7008/S$. She has the following options on the Singapore dollar to choose from: Ea. Should Cece buy a put on Singapore dollars or a call on Singapore dollars?b. What is Cece's breakeven price on the option purchased in part a?c. Using your answer from part a, what is Cece's gross profit and net profit (including premium) if the spot rate at the end of 90 days is indeed $0.7008/S$?d. Using your answer from part a, what is Cece's gross profit and net profit (including premium) if the spot rate at the end of 90 days is $0.8006/S$?a. Should Cece buy a put on Singapore dollars or a call on Singapore dollars? (Select the best choice below.)O A. Since Cece expects the Singapore dollar to appreciate versus the U.S. dollar, she should buy a call on Singapore dollars. This gives her the right to sell Singapore dollarsat a future date at $0.6500/S$ each, and then immediately rebuy them in the open market at $0.7008/S$ each for a profit. (If her expectation of the future spot rate provescorrect.)O B. Since Cece expects the Singapore dollar to appreciate versus the U.S. dollar, she should buy a call on Singapore dollars. This gives her the right to buy Singapore dollarsat a future date at $0.6500/S$ each, and then immediately resell them in the open market at $0.7008/S$ each for a profit. (If her expectation of the future spot rate provescorrect.)OC. Since Cece expects the Singapore dollar to appreciate versus the U.S. dollar, she should buy a put on Singapore dollars. This gives her the right to buy Singapore dollarsat a future date at $0.6500/S$ each, and then immediately resell them in the open market at $0.7008/S$ each for a profit. (If her expectation of the future spot rate provescorrect.)O D. Since Cece expects the Singapore dollar to appreciate versus the U.S. dollar, she should buy a call on Singapore dollars. This gives her the right to buy Singapore dollarsat a future date at $0.7008/S$ each, and then immediately resell them in the open market at $0.6500/S$ each for a profit. (If her expectation of the future spot rate provescorrect.)Data table(Click on the icon e to import the table into a spreadsheet.)OptionPut (US$/Singapore dollar)Call (US$/Singapore dollar)Strike PricePremium0.65000.000030.65000.00046PrintDone

Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…

Cece Cao in Jakarta. Cece Cao trades currencies for Sumatra Funds in Jakarta. She focuses nearly all of her time and attention on the U.S. dollar/Singapore dollar ($/S$) cross ate. The current spot rate is $0.6000/S$. After considerable study, she has concluded that the Singapore dollar will appreciate versus the U.S. dollar in the coming 90 days, probably to about $0.7008/S$. She has the following options on the Singapore dollar to choose from: a. Should Cece buy a put on Singapore dollars or a call on Singapore dollars? p. What is Cece's breakeven price on the option purchased in part a? c. Using your answer from part a, what is Cece's gross profit and net profit (including premium) if the spot rate at the end of 90 days is indeed $0.7008/S$? d. Using your answer from part a, what is Cece's gross profit and net profit (including premium) the spot rate at the end of 90 days is $0.8006/S$? Chuld Cuu

Cece Cao in Jakarta. Cece Cao trades currencies for Sumatra Funds in Jakarta. She focuses nearly all of her time and attention on the U.S. dollar/Singapore dollar ($/S$) cross ate. The current spot rate is $0.6000/S$. After considerable study, she has concluded that the Singapore dollar will appreciate versus the U.S. dollar in the coming 90 days, probably to about $0.7008/S$. She has the following options on the Singapore dollar to choose from: a. Should Cece buy a put on Singapore dollars or a call on Singapore dollars? p. What is Cece's breakeven price on the option purchased in part a? c. Using your answer from part a, what is Cece's gross profit and net profit (including premium) if the spot rate at the end of 90 days is indeed $0.7008/S$? d. Using your answer from part a, what is Cece's gross profit and net profit (including premium) the spot rate at the end of 90 days is $0.8006/S$? Chuld Cuu

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

See similar textbooks

Similar questions

The treasurer of a major U.S. firm has $38 million to invest for three months. The interest rate in the United States is .55 percent per month. The interest rate in Great Britain is .59 percent per month. The spot exchange rate is £.76, and the three-month forward rate is £77. Ignore transaction costs. a. If the treasurer invested the company's funds in the U.S., how much would the investment be worth after three months? Note: Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89. b. If the treasurer invested the company's funds in Great Britain, how much would the investment be worth after three months in U.S. dollars? Note: Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89. a. U.S. investment b. Great Britain investment
Alex is a currency speculator working for CIBC Currency funds in Toronto. He focuses nearly all of his time and attention on the U.S. dollar /Canadian dollar ($/C$) exchange rate. The current spot rate is $1.3546/C$. He believes that the Canadian dollar (C$) will appreciate versus the U.S. dollar over the coming 90 days. He can choose between the following options on Canadian dollar: Option Strike price Premium Put on C$ $1.400/C$ $0.00045/C$ Call on C$ $1.415/C$ $0.00048/C$ Should Alex buy a put option on Canadian dollars or a call option on Canadian dollars?
Samuel Samosir works for Peregrine Investments in Jakarta, Indonesia. He focuses his time and attention on the U.S.dollar/Singapore dollar ($/S$) cross-rate. The current spot rate is $1.39/S$. After considerable study, he has concluded that the Singapore dollar will appreciate versus the U.S. dollar in the coming 90 days, probably to about $1.44/S$. He is considering trading options to profit and has the following options on the Singapore dollar to choose from Option choices on the Singapore dollar: Strike price (US$/Singapore dollar) Premium (US$/Singapore dollar) Call on S$ $1.371 $0.047 Put on S$ $1.37 $0.006 Samuel decides to buy call options in Singapore dollars. What will be Samuel's profit/loss if the ending spot rate is $1.286/S$ in 90 days? Keep all decimal places.
Any help is appreciated!
Samuel works for Peregrine Investments Indonesia. He focuses his time and attention on the U.S. dollar/Singapore dollar ($/S$) cross-rate. The current spot rate is $1.39/S$. After considerable study, he has concluded that the Singapore dollar will appreciate versus the U.S. dollar in the coming 90 days, probably to about $1.44/S$. He is considering trading options to profit and has the following options on the Singapore dollar to choose from: Option choices on the Singapore dollar: Call on S$ Put on S$ Strike price (US$/Singapore dollar) $1.35 $1.45 Premium (US$/Singapore dollar) $0.047 $0.065 Samuel decides to sell put options on Singapore dollars. What is Samuel's break-even spot rate at maturity?
Samuel Samosir works for Peregrine Investments in Jakarta, Indonesia. He focuses his time and attention on the U.S. dollar/Singapore dollar ($/S$) cross-rate. The current spot rate is $1.39/S$. After considerable study, he has concluded that the Singapore dollar will depreciate versus the U.S. dollar in the coming 90 days, probably to about $1.35/S$. He is considering trading options to profit and has the following options on the Singapore dollar to choose from: Option choices on the Singapore dollar: Call on S$ Put on S$ Strike price (US$/Singapore dollar) $1.50 $1.37 Premium (US$/Singapore dollar) $0.064 $0.006 Samuel decides to sell call options in Singapore dollars. What is Samuel's (net) profit/loss (in dollars) per option if the spot rate is $1.54/S$ at maturity?
Please solve all questios
Use the information in Table 1 to complete the chart. Enter the FORMULA you will use to calculate the prices each month. Name of Currency Exchange Rate JANUARY $1 = Exchange Rate MARCH $1 = Romanian Leu 4.37 4.30 South African Rand 16.14 18.18 Swedish Krona 9.15 9.10 Tunisian Dinar 2.88 2.92 Price of a Combo Meal FORMULA to calculate January Dollar Price FORMULA to calculate March Dollar Price A hamburger combo meal in Romania = 20.00 Lei A hamburger combo meal in South Africa = 3.88 Rand A hamburger combo meal in Sweden = 82.00 Kronar A hamburger combo meal in Tunisia = 10 Dinar
Samuel Samosir works for Peregrine Investments in Jakarta, Indonesia. He focuses his time and attention on the U.S. dollar/Singapore dollar ($/S$) cross-rate. The current spot rate is $1.39/S$. After considerable study, he has concluded that the Singapore dollar will appreciate versus the U.S. dollar in the coming 90 days, probably to about $1.44/S$. He is considering trading options to profit and has the following options on the Singapore dollar to choose from: Option choices on the Singapore dollar: Strike price (US$/Singapore dollar) Premium (US$/Singapore dollar) Call on S$ $1.36 $0.077 Put on S$ $1.37 $0.006 Samuel decides to buy call options in Singapore dollars. What is Samuel's Break-Even spot rate at maturity? Keep the sign and all three decimal places.
We are a car dealership in NOLA. We will import Japanese Cars (Suzuki) for JPY 200,000,000 We will pay in 3 months We will sell these cars in the US for USD We will collect USD within the 3 months Risk defined We are collecting USD now (within the 3 months) We will buy JPY in 3 months (to pay for our debt of JPY 200,000,000) What if the JPY value against the USD goes up? Please hedge this foreign exchange risk using derivatives similar to our class discussion on March 9th. Please upload your spreadsheet showing your work.
Peder Mueller-UIA (B). Peder Mueller is a foreign exchange trader for a bank in New York. Using the values and assumptions here,, he decides to seek the full 4.802% return available in U.S. dollars by not covering his forward dollar receipts an uncovered interest arbitrage (UIA) transaction. Assess this decision. The uncovered interest arbitrage (UIA) profit amount is Data table (Round to the nearest cent.) (Click on the following icon in order to copy its contents into a spreadsheet.) Arbitrage funds available USD1,000,000 Spot exchange rate (CHF = USD1.00) 1.2813 3-month forward rate (CHF = USD1.00) 1.2745 Expected spot rate in 3 months (CHF = USD1.00) 1.2699 U.S. dollar 3-month interest rate 4.802% Swiss franc 3-month interest rate 3.198% X
Samuel Samosir works for Peregrine Investments in Jakarta, Indonesia. He focuses his time and attention on the U.S. dollar/Singapore dollar ($/S$) cross-rate. The current spot rate is $1.39/S$. After considerable study, he has concluded that the Singapore dollar will appreciate versus the U.S. dollar in the coming 90 days, probably to about $1.44/S$. He is considering trading options to profit and has the following options on the Singapore dollar to choose from Option choices on the Singapore dollar: Call on S$ Put on S$ Strike price (US$/Singapore dollar) $1.300 $1.37 Premium (US$/Singapore dollar) $0.047 $0.006 Samuel decides to buy call options in Singapore dollars. What will be Samuel's profit/loss if the ending spot rate is $1.377/S$ in 90 days? Keep all decimal places.

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS