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
![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 $1.34/S$. 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$
$1.35
$0.047
Put on S$
$1.36
$0.046
Samuel decides to buy put options on Singapore dollars. What is Samuel's (net) profit/loss
(in dollars) if the spot rate is $1.31/S$ at maturity? Keep the sign and all decimal numbers.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6491b3e0-e649-4c41-a513-7f4c6cd4e4be%2F0b31d1de-7a43-4a42-8f24-88cd45fcc170%2Fhel3j5_processed.png&w=3840&q=75)
Transcribed Image Text: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 $1.34/S$. 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$
$1.35
$0.047
Put on S$
$1.36
$0.046
Samuel decides to buy put options on Singapore dollars. What is Samuel's (net) profit/loss
(in dollars) if the spot rate is $1.31/S$ at maturity? Keep the sign and all decimal numbers.
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