(Call Option P/L)Samuel Samosir works for Peregrine Investments in Jakarta, Indonesia. He focuseshis 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 appreciateversus the U.S. dollar in the coming 90 days, probably to about $1.44/S$. He is considering tradingoptions 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$$1.36$0.066Put on S$$1.37$0.006Samuel decides to buy call options in Singapore dollars. What is Samuel's (net) profit/loss (indollars) per option if the spot rate is $1.37/S$ at maturity? Keep the sign and all decimal places.Do not include currency sign in your answer.

Net profit or loss = Spot rate - Strike price - Premium

Samuel decides to buy call options in Singapore dollars. What is Samuel's (net) profit/loss (in dollars) per option if the spot rate is $1.37/S$ at maturity? Keep the sign and all decimal places. Do not include currency sign in your answer.

Samuel decides to buy call options in Singapore dollars. What is Samuel's (net) profit/loss (in dollars) per option if the spot rate is $1.37/S$ at maturity? Keep the sign and all decimal places. Do not include currency sign in your answer.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter22: International Financial Management

Section: Chapter Questions

Problem 2P

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Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.

Question

(Call Option P/L)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
$0.066
Put on S$
$1.37
$0.006
Samuel decides to buy call options in Singapore dollars. What is Samuel's (net) profit/loss (in
dollars) per option if the spot rate is $1.37/S$ at maturity? Keep the sign and all decimal places.
Do not include currency sign in your answer.

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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 $0.047 Put on S$ $1.589 $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 $1.314/S$ in 90 days? Keep all decimal places.
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You Answered Correct Answer 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: Call on S$ Option choices on the Singapore dollar: Strike price (US$/Singapore dollar) Premium (US$/Singapore dollar) 0.106 $1.35 0.006 $0.047 Put on S$ $1.357 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. $0.006
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