of $0.8100/NZS traded at a premium of $0.0192 per NZS and with an expira date three months from now. The option is for NZS100,000. Suppose that you have bought such a call option. a. Plot your profit or loss on a graph should you exercise before maturity at when the NZS is traded spot at between $0.7000/NZS and $0.9200/NZS. rin

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
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Consider an American call option on New Zealand dollars (NZS) with a strike price
of $0.8100/NZ$ traded at a premium of $0.0192 per NZ$ and with an expiration
date three months from now. The option is for NZ$100,000.
Suppose that you have bought such a call option.
a. Plot your profit or loss on a graph should you exercise before maturity at a time
when the NZS is traded spot at between $0.7000/NZS and $0.9200/NZS.
b. Find the break-even exchange rate.
Transcribed Image Text:Consider an American call option on New Zealand dollars (NZS) with a strike price of $0.8100/NZ$ traded at a premium of $0.0192 per NZ$ and with an expiration date three months from now. The option is for NZ$100,000. Suppose that you have bought such a call option. a. Plot your profit or loss on a graph should you exercise before maturity at a time when the NZS is traded spot at between $0.7000/NZS and $0.9200/NZS. b. Find the break-even exchange rate.
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