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 three sub-parts when multiple sub-parts posted under single question. Hence, the answers for the first three sub-parts provided below. Please repost the remaining sub-parts with complete question information. A call option is an instrument which provides its holder an option to buy an underlying asset on a future date at a predetermined price. A put option is an instrument which provides its holder an option to sell an underlying asset on a future date at a predetermined price.a. Since Cece is expecting price rise, she should buy call option with the strike price of $0.6500. On maturity if her prediction turned out to be true, then she would have right to buy call option @ $0.6500 and can sell it in the open market @$0.7008 Correct answer - Bb. Breakeven price for Cece = Strike price + Premium paid = $0.6500 + $0.00046 = $0.65046c. Payoff to call option holder on expiry is: If Market price <= Strike price, then payoff = Loss of premium paid If Market Price > Strike price, then payoff = Market price - Strike price - Premium paid Since, Market price ($0.7008) is greater than strike price ($0.6500), Payoff = $0.7008 - $0.6500 - $0.00046 = $0.05034 Profit

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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

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You Answered Correct Answer 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) -0.132 Call on S$ -0.047 $1.371 $0.047 Put on S$ $1.37 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. $0.006
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Samuel Samosir works for Peregrine Investments in Jakarta, Indonesia. He focuses his time and attention on the U.S. dollar/Singapore dollar ($/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: Strike price (US$/Singapore dollar) Premium (US$/Singapore dollar) Call on S$ $1.34 $0.075 Put on S$ $1.37 $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 $1.56/S$ at maturity?
The treasurer of a major U.S. firm has $22 million to invest for three months. The interest rate in the United States is .22 percent per month. The interest rate in Great Britain is .27 percent per month. The spot exchange rate is £.622, and the three-month forward rate is £.624. Ignore transaction costs. What would be the value of the investment in three months if the money is invested in the U.S. or if it is invested in Great Britain? (Do not round intermediate calculations and enter your answers in dollars, not in millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.) U.S. Great Britain
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Alex is a currency speculator working for CIBC Currency funds in Toronto. He focuses nearly all of his time and attention on the U.S. dollar /Canadian dollar ($/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?

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