(Call Option Break-Even Spot Rate) 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 Singaporedollar will appreciate versus the U.S. dollar in the coming 90 days, probably to about $1.44/S$. Heis considering trading options to profit and has the following options on the Singapore dollar tochoose fromOption choices on the Singapore dollar:Strike price (US$/Singapore dollar)Premium (US$/Singapore dollar)Call on S$$1.356$0.047Put on S$$1.37$0.006Samuel decides to buy call options in Singapore dollars. What will be Samuel's break-even spot rate(in direct format)? Keep all decimal places. Do not include currency in your answer.

The break even spot rate for the buyer of call option = Strike rate + premiumThe break even spot rate for the buyer of call option = $1.356 + $0.047 = $1.403/SThe break even spot rate for the buyer of call option =$1.356 + $0.047 = $1.403/S$ nbsp;The break even spot rate for the buyer of call option is $1.403/S

Answered: Samuel decides to buy call options in…

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Samuel decides to buy call options in Singapore dollars. What will be Samuel's break-even spot rate (in direct format)? Keep all decimal places. Do not include currency in your answer.

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

(Call Option Break-Even Spot Rate) 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$
$1.356
$0.047
Put on S$
$1.37
$0.006
Samuel decides to buy call options in Singapore dollars. What will be Samuel's break-even spot rate
(in direct format)? Keep all decimal places. Do not include currency in your answer.

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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 Option choices on the Singapore dollar: Strike price (US$/Singapore dollar) Premium (US$/Singapore dollar) -0.132 Call on S$ -0.047 $1.371 $0.047 Put on S$ $1.37 Samuel decides to buy call options in Singapore dollars. What will be Samuel's profit/loss if the ending spot rate is $1.286/S$ in 90 days? Keep all decimal places. $0.006
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