If Lucia buys 20 call contracts on Spanish pesetas in the London Exchange (one option contract consists of 10,000 pesetas), what is Lisa's net profit (including premium) if the spot rate at the end of 180 days is £ 181.397/Pta?
If Lucia buys 20 call contracts on Spanish pesetas in the London Exchange (one option contract consists of 10,000 pesetas), what is Lisa's net profit (including premium) if the spot rate at the end of 180 days is £ 181.397/Pta?
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
Related questions
Question
9
Transcribed Image Text:Lucia works as treasurer of Mucho-Cambio, an international financial broker/investment
house located in London. Her latest speculative position is to profit from his expectation
that the Spanish peseta (Pta)will drop significantly against the British pound (£). The current
spot rate is £180.620/Pta. She must choose ha an the following 180-day options on the
Spanish peseta:
webReader Menu
Option
Put on Spanish Peseta
Call on Spanish Peseta
Strike Price
£ 178.974/Pta
£ 178.974/Pta
Premium
£ 0.047/Pta
£ 0.044/Pta
If Lucia buys 20 call contracts on Spanish pesetas in the London Exchange (one option
contract consists of 10,000 pesetas), what is Lisa's net profit (including premium) if the spot
rate at the end of 180 days is £ 181.397/Pta?
Answer
Round to the nearest £0.01; Do not use £ sign; do not use commas to separate thousands.
Use the negative sign in front of first digit if the value you find is negative.
Your Answer:
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 1 images
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
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