Kiko Peleh's Puts. Kiko Peleh writes a put option on Japanese yen with a strike priceof $ 0.008000 divided by yen (yen 125.00 divided by $) at a premium of 0.0080cents per yen and with an expiration date six month from now. The option is for¥12,500,000. What is Kiko's profit or loss at maturity if the ending spot rates are yen110 divided by S, yen 115 divided by S, yen 120 divided by $, yen 125 divided by S,yen 130 divided by S, yen 135 divided by S, and yen 140 divided by S.

An option is an agreement between two parties granting one the opportunity to buy or sell a security…

¥12,500,000. What is Kiko's profit or loss at maturity if the ending spot rates are yen 110 divided by S, yen 115 divided by S, yen 120 divided by S, yen 125 divided by S, yen 130 divided by S, yen 135 divided by S, and yen 140 divided by S.

¥12,500,000. What is Kiko's profit or loss at maturity if the ending spot rates are yen 110 divided by S, yen 115 divided by S, yen 120 divided by S, yen 125 divided by S, yen 130 divided by S, yen 135 divided by S, and yen 140 divided by S.

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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Concept explainers

Instruments of Foreign Exchange Market

Foreign exchange is a worldwide market in which one nation’s currency is converted into another nation’s currency. In further terms, exchanging of nations currency with foreign currencies. Foreign exchange happens at a specified rate which is termed the foreign exchange rate. The exchange rates are not constant continuously changing as they are derived by market forces of supply and demand. Widely used foreign currencies are the United States- dollar, Euro, Japanese Yen, British pound, and Australian dollar. US- dollar is the most denominated foreign currency. The Euro to US dollar is a widely used currency pair in the forex market as these two currencies represent the world’s enormous economy. Forex trade is simple as exchanging currencies at the bank. The main players of forex markets are the central banks, financial institutions, intermediaries, investments banks, and other banks. Central Bank is the supreme player who decides the currency value of their own nation on the forex market. Mostly foreign exchange-traded at FX market (forex market) when tourists’ visits a foreign country, import, and export happens between two countries.

Question

Kiko Peleh's Puts. Kiko Peleh writes a put option on Japanese yen with a strike price
of $ 0.008000 divided by yen (yen 125.00 divided by $) at a premium of 0.0080
cents per yen and with an expiration date six month from now. The option is for
¥12,500,000. What is Kiko's profit or loss at maturity if the ending spot rates are yen
110 divided by S, yen 115 divided by S, yen 120 divided by $, yen 125 divided by S,
yen 130 divided by S, yen 135 divided by S, and yen 140 divided by S.

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