John Hill is a Sydney-based investor. He has been closely following his investment in 1,000 shares of Obrekete, an Italian firm that went public in June 2018. When he purchased his 1,000 shares at €80 per share, the euro was trading at AUD$2.5657 / €. Currently, the share is trading at €86 per share and the exchange rate is AUD$2.5563/ €. a. If John sells his shares today, what percentage change in the share price would he receive? b. What is the percentage change in the value of the euro versus the Australian dollar over this same period? c. What is the total return that John would earn on his shares if he sold them at €86 per share? d. If John waits to sell his shares when the price rises to €88 per share, what will be his returns? e. If the current spot exchange rate changes to AUD$2.4863 / €, what would be the total return on the Obrekete investment in Australian dollars if the price remains at €86 per share?

John Hill is a Sydney-based investor. He has been closely following his investment in 1,000 shares of Obrekete, an Italian firm that went public in June 2018. When he purchased his 1,000 shares at €80 per share, the euro was trading at AUD$2.5657 / €. Currently, the share is trading at €86 per share and the exchange rate is AUD$2.5563/ €. a. If John sells his shares today, what percentage change in the share price would he receive? b. What is the percentage change in the value of the euro versus the Australian dollar over this same period? c. What is the total return that John would earn on his shares if he sold them at €86 per share? d. If John waits to sell his shares when the price rises to €88 per share, what will be his returns? e. If the current spot exchange rate changes to AUD$2.4863 / €, what would be the total return on the Obrekete investment in Australian dollars if the price remains at €86 per share?

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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2. You are a U.S. investor and wish to buy 10,000 shares of Club Méditerranée ("Club Med"). You can buy them on the Paris Bourse or on SEAQ International in London. You ask the brokers to quote you net prices (no commissions paid). There are no taxes on foreign shares listed in London. Here are the quotes: London (in £) Paris (in €) $/£ (dollars per pound) 1.5000 1.5040 €/S (euros per dollar) 0.91100 0.91200 What is your total dollar cost if you buy the Club Med shares at the cheaper place? 56-574 782-78%
Show your work. Make it clear what the final answer is.
Dumo is a trader at ZNF Equity traders and has just identified a stock, UFSI Limited, which is currently trading at R25 per share. Dumo decides to take a long position in at-the money put option and simultaneously buys one share of UFSI stock. The put option expires in 3 months’ time and costs R2.5 per share. Assume a contract consists of one put option. Required: Tabulate the Profit to the strategy at expiration for the following Exercise price R30; Stock price 20. Exercise price R30; Stock price 35. ST =20 ST =35 Stock Put (Pt) Premium Total profit
Alex is a currency speculator working for CIBC Currency funds in Toronto. He focuses nearly all of his time and attention on the U.S. dollar /Canadian dollar ($/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?
John Hill is a Sydney-based investor. He has been closely following his investment in 1,000 shares of Obrekete, an Italian firm that went public in June 2018. When he purchased his 1,000 shares at €80 per share, the euro was trading at AUD$2.5657 / €. Currently, the share is trading at €86 per share and the exchange rate is AUD$2.5563/ €. d. If John waits to sell his shares when the price rises to €88 pet share, what will be his returns? e. If the current spot exchange rate changes to AUD$2.4863 / €, what would be the total return on the Obrekete investment in Australian dollars if the price remains at €86 per share?
Maverik Avengers is an active currency trader based in Kuala Lumpur, Malaysia. He has been following the movements of € closely since the official Brexit. He notices that the exchange rates between the € and RM are quoted directly at 5.0500-80 and the available 90-day forward points for the currency pair are 180-200. If Avengers speculates the spot rates between the € and RM to be trading at 5.0600-50 at the end of 90 days, demonstrate how Avengers can make a speculation profit with RM10 million.
Samuel Samosir works for Peregrine Investments in Jakarta, Indonesia. He focuses his time and attention on the U.S.dollar/Singapore dollar ($/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.
Jaleel is holding some Tesla shares (NASDAQ: TSLA) and The TSLA stocks are currently trading at $985 on the Nasdaq. Given TSLA stocks are very volatile, Jaleel wishes to protect the value of his investments. He seeks your advice on using option contracts and presents a list of options for you to choose from. Assume the number of underlying shares per contract is 100 shares. Strike Call premium Moneyness Put premium Moneyness $975 $10.01 $0.01 $980 $4.45 $0.04 $985 $0.63 $0.99 $1005 $0.05 $20.48 (i) Please specify the moneyness of the above options. Are they in the money, at the money or out of the money? (ii) Identify what kind of risk that Jaleel is facing and to hedge this risk, which option would you suggest that Jaleel should purchase? Why?
An Omani businessman has just completed transactions in UAE. He is now holding AED 880,000 and $120,000 wants to convert it to Omani rial (OMR). His currency dealer provides this quotation: Bid Ask USD/AED 0.2722 - 08 OMR/USD 0.3846 - 04 What are his proceeds from conversions?
En Zahir, the CFO of Cahaya Berhad believes that all corporate securities have implicit or explicit option features and as a result, understanding securities that possess option features requires knowledge of the factors that determine an option's value. En Zahir is also aware that the most familiar options are stock options. On 13th June 2024, En Zahir buys call options on 50,000 units of Jelantas Berhad shares with an exercise price of RM40 per unit. The value of the options is RM2 per unit and the termination date is on 30th June 2024. On 30th June 2024, the share price of Jelantas Berhad share is RM42. From the above information you are required to compute En Zahir's gain or losses. Based on your computation, explain to En Zahir about this situation.
Samuel Samosir works for Peregrine Investments in Jakarta, Indonesia. He focuses his time and attention on the U.S. dollar/Singapore dollar ($/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.
8) On July 1, 2022, Chester Aguilar acquires 1,000 shares of a foreign company at 10 Foreign Currency units (FC, hereafter) per share. He acquired the funds for this purchase when FC1- $1.48, a value that did not change prior to the date on which he purchased the shares. He sells the 1,000 shares December 1, 2022 for FC12 per share. On this date the exchange rate is FC1- $1.46. What is the effect of the sale transaction on Chester's net income for 20227 A) $2,520 B) $2,720 C) $1,360 D) $1,160

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