Samuel Samosir works for Peregrine Investments in Jakarta, Indonesia. He focuses his timeand 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 willappreciate versus the U.S. dollar in the coming 90 days, probably to about $1.44/S$. He isconsidering trading options to profit and has the following options on the Singapore dollarto choose from:Option choices on the Singapore dollar:Strike price (US$/Singapore dollar)Premium (US$/Singapore dollar)Call on S$$1.35$0.047Put on S$$1.357$0.006Samuel decides to sell one put option in Singapore dollars. What will be Samuel's profit/lossif the ending spot rate is $1.457/S$ in 90 days? Keep all decimal places.

We are given the following options on the Singapore dollar:current spot rate is $1.39 /S$The…

Answered: o sell one put option in Singapore…

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o sell one put option in Singapore dollars. What will be Samuel's profit/loss

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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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
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$
$1.35
$0.047
Put on S$
$1.357
$0.006
Samuel decides to sell one put option in Singapore dollars. What will be Samuel's profit/loss
if the ending spot rate is $1.457/S$ in 90 days? Keep all decimal places.

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