I purchased a call option on Canadian dollar for $.018 per unit. The strike price was $.08 and the spot rate at the time the option was exercised was $.082. Assume there are 50,000 units in a Canadian dollar option. What was my net profit on this option

I purchased a call option on Canadian dollar for $.018 per unit. The strike price was $.08 and the spot rate at the time the option was exercised was $.082. Assume there are 50,000 units in a Canadian dollar option. What was my net profit on this option

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 buy 6 call options with a contract size of AUD 30,000. They have a USD/AUD strike price of 0.57 and a premium of 7.86 (USD/AUD). You hold these options for 1 month and then sell them for 6.8 (USD/AUD). The brokerage fee on each contract is payable on both entry and exit and is USD 12.21. What is the net profit on this transaction in USD? O a. -190,946.52 Ob. -31,824.42 Oc. -190,800.00 O d. -190,873.26 Oe. -55,800.00 You buy 6 call options with a contract size of AUD 30,000. They have a USD/AUD strike price of 0.57 and a premium of 7.86 (USD/AUD). You hold these options for 1 month and then sell them for 6.8 (USD/AUD). The brokerage fee on each contract is payable on both entry and exit and is USD 12.21. What is the net profit on this transaction in USD? O a -190,946.52 Ob 31,824.42 O-190,800.00 Od 190,873.26 -55.800.00
Assume that Smith Corp. will need to purchase 200,000 British pounds in 90 days. A call option exists on British pounds with an exercise price of $1.68, a 90-day expiration date, and a premium of $.03. A put option exists on British pounds with an exercise price of $1.69, a 90-day expiration date, and a premium of $.03. Smith Corporation plans to purchase options to cover its future payables. It will exercise the option in 90 days (if at all). It expects the spot rate of the pound to be $1.76 in 90 days. Determine the amount of dollars it will pay for the payables, including the amount paid for the option premium. Group of answer choices $338,000 $342,000 $332,000 $344,000
An investor has purchased United States dollar call options, with an exercise price of A$1.15 anda premium of A$0.03 per unit.(a) Calculate the break-even price. (b) Calculate the profit or loss of the option for the investor if the spot rate at the time the investor considers exercising the options is : (1) A$1.10 (2) A$1.17 (3) A$1.23.(c) What is the maximum loss for the investor?(d) Explain why the investor could have an unlimited profit if the options are exercised.(e) Explain in general the similarities of and differences between a currency call option and a currency put option.
Doctor Dumpkins is bullish on the British pound so he sells a one-month put for $0.03. The strike price of the call is $1.24. On the expiration day, the spot price of the British pound is $1.27. Calculate the break-even price, the option payoff at expiration, and the net profit at expiration.
Speculating with Currency Call Options. ABC Inc., purchased 75,000 units call option on British pounds for $.021 per unit. The strike price was $ 0.78 and the spot rate at the time the option was exercised was $0.98. Assume there are 25,000 units per British pound option. What was ABC's net profit option?
EBOOK Mike Suerth sold a call option on Canadian dollars for $0.01 per unit. The strike price was $0.76, and the spot rate at the time the option was exercised was $0.85. Assume Mike did not obtain Canadian dollars until the option was exercised. Also assume that there are 54,900 units in a Canadian dollar option. What was Mike's net profit on the call option? Use a minus sign to enter loss values, if any. Round your answer to the nearest dollar. -41175
As a major maker/manufacturer of premium leather hand luggage, you are concerned that leather prices may move beyond their current level of $30/pound when you are ready for production. Therefore, you enter into the appropriate option contract. The strike price is fixed at the current spot price at an options price of $5.00 per option. What is the position you take and your profit or loss, if eight months later, leather is selling at the spot market for $38.50? Olong futures, $7.50 Oshort futures, -$4.00 Olong call, $3.50 Olong call, -$5.00 O long futures, $5.00
Red Corporation has a 90-day call option for $100,000 at a strike price of P52.25. As of today, the selling spot rate is P52.30/dollar while the buying spot rate is P52.13/dollar. What| is the current position of Red Corporation with regard to its call option? a.) in-the-money by 12,000 b.) in-the-money by 5,000 c.) out-the-money by12,000 d.) out-the-money by 5,000
Assume that Promina Group expects to need NZ$943,000 in 6 months. The existing spot rate of the New Zealand dollar is $0.70. The 6-month forward rate of the New Zealand dollar is $0.72. Promina Group created a probability distribution for the future spot rate in 6 months as follows: FUTURE SPOT RATE PROBABILITY 28% 46% 26% $0.68 $0.73 $0.78 Assume that 6-month put options on New Zealand dollars are available with an exercise price of $0.73 and a premium of $0.04 per unit. 6-month call options on New Zealand dollars are available with an exercise price of $0.70 and a premium of $0.03 per unit. Assume the following money market rates per annum: US Deposit rate 7% Borrowing rate 8% Determine whether a forward hedge, a money market hedge, or a currency options hedge would be the most appropriate. NEW ZEALAND 2% 3% a. b. Compare the most appropriate hedge to an unhedged strategy and decide whether Promina Group should hedge its position.
6. An investor buys a one-year European-style put option on the same stock. The strike is $105, and the premium is $10. In a year, the spot stock price is $90 per share. What is the payoff from financially settling the long put position? In a year, the spot stock price is $95 per share. What is the payoff from financially settling the long put position? In a year, the spot stock price is $100 per share. What is the payoff from financially settling the long put position? In a year, the spot stock price is $105 per share. What is the payoff from financially settling the long put position? In a year, the spot stock price is $110 per share. What is the payoff from financially settling the long put position?
Give typing answer with explanation and conclusion
You have just purchased a six-month, $550,000 negotiable CD, which will pay a 8.5 percent annual interest rate. a. If the market rate on the CD rises to 9 percent, what is its current market value?b. If the market rate on the CD falls to 8.25 percent, what is its current market value?

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