Rememebr GBP is the British pound and the symbol for GBP is £. Nike is expecting a payment of £10 mio in 6 months (they are long GBP). The Forward is: $1.3000/E Nike Purchases a 6 month £ Put/$ Call Struck at $1.3000/£, for $.05/E 1- How much will it cost them to buy the GBP put, and 2-what is the break even on the ENTIRE position (the expected revenue less the option premium)? Hint: Remember the gain and the break even occur as GBP rises. OA. The option costs $500,000 and the break even is $1.3450/E OB. The option costs $600,000 and the break even is $1.4050/E OC. The option costs $500,000 and the break even is $1.3500/£ OD. The option costs £400,500, and the break even is $1.3550/E
Rememebr GBP is the British pound and the symbol for GBP is £. Nike is expecting a payment of £10 mio in 6 months (they are long GBP). The Forward is: $1.3000/E Nike Purchases a 6 month £ Put/$ Call Struck at $1.3000/£, for $.05/E 1- How much will it cost them to buy the GBP put, and 2-what is the break even on the ENTIRE position (the expected revenue less the option premium)? Hint: Remember the gain and the break even occur as GBP rises. OA. The option costs $500,000 and the break even is $1.3450/E OB. The option costs $600,000 and the break even is $1.4050/E OC. The option costs $500,000 and the break even is $1.3500/£ OD. The option costs £400,500, and the break even is $1.3550/E
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
![Rememebr GBP is the British pound and the symbol for GBP is £.
Nike is expecting a payment of £10 mio in 6 months (they are long GBP). The Forward is : $1.3000/E
Nike Purchases a6 month £ Put/S Call Struck at $1.3000/ £, for $.05/ E
1- How much will it cost them to buy the GBP put, and
2- what is the break even on the ENTIRE position (the expected revenue less the option premium)?
Hint: Remember the gain and the break even occur as GBP rises.
OA. The option costs $500,000 and the break even is $1.3450/£
B. The option costs $600,000 and the break even is $1.4050/E
OC. The option costs $500,000 and the break even is $1.3500/ £
O D. The option costs E400,500, and the break even is $1.3550/E](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fef42a20c-63ee-49b4-9f61-0069dc1f0469%2F3b6502b4-339a-4889-8ff2-ebfdc1f33df8%2Fqld7ng_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Rememebr GBP is the British pound and the symbol for GBP is £.
Nike is expecting a payment of £10 mio in 6 months (they are long GBP). The Forward is : $1.3000/E
Nike Purchases a6 month £ Put/S Call Struck at $1.3000/ £, for $.05/ E
1- How much will it cost them to buy the GBP put, and
2- what is the break even on the ENTIRE position (the expected revenue less the option premium)?
Hint: Remember the gain and the break even occur as GBP rises.
OA. The option costs $500,000 and the break even is $1.3450/£
B. The option costs $600,000 and the break even is $1.4050/E
OC. The option costs $500,000 and the break even is $1.3500/ £
O D. The option costs E400,500, and the break even is $1.3550/E
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
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 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Essentials Of Investments](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781260013924/9781260013924_smallCoverImage.jpg)
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
![FUNDAMENTALS OF CORPORATE FINANCE](https://www.bartleby.com/isbn_cover_images/9781260013962/9781260013962_smallCoverImage.gif)
![Financial Management: Theory & Practice](https://www.bartleby.com/isbn_cover_images/9781337909730/9781337909730_smallCoverImage.gif)
![Essentials Of Investments](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781260013924/9781260013924_smallCoverImage.jpg)
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
![FUNDAMENTALS OF CORPORATE FINANCE](https://www.bartleby.com/isbn_cover_images/9781260013962/9781260013962_smallCoverImage.gif)
![Financial Management: Theory & Practice](https://www.bartleby.com/isbn_cover_images/9781337909730/9781337909730_smallCoverImage.gif)
![Foundations Of Finance](https://www.bartleby.com/isbn_cover_images/9780134897264/9780134897264_smallCoverImage.gif)
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
![Fundamentals of Financial Management (MindTap Cou…](https://www.bartleby.com/isbn_cover_images/9781337395250/9781337395250_smallCoverImage.gif)
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…](https://www.bartleby.com/isbn_cover_images/9780077861759/9780077861759_smallCoverImage.gif)
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