You are on options trader specializing in the Singapore dollar. The current spot rate is $0.60/S$. A put option on the Singapore dollar that expires in 90 days with a strike price of $0.64/S$ sells for a premium of $0.00004/S$, while a call option on the Singapore dollar that expires in 90 days with the same strike price sells for a premium of $0.00046/S$. You believe the spot rate will go to $0.68 in 90 days and would like to buy 1,000,000 options. Determine whether based on that belief, you would buy calls or puts, and then calculate how much money you make or lose if you are right and the spot rate goes to exactly $0.68? O $39,540 O $29,540 O-$40,000 $40,000 O-$40,460

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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.