You bought British pound put option at a premium of $0.03 per unit. The exercise price is $1.41. In one month (right before the option expires), British pounds trade at $1.43 in the spot market. What will be your net profit?

You bought British pound put option at a premium of $0.03 per unit. The exercise price is $1.41. In one month (right before the option expires), British pounds trade at $1.43 in the spot market. What will be your net profit?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

1. You bought British pound put option at a premium of $0.03 per unit. The exercise price is $1.41. In one month (right before the option expires), British pounds trade at $1.43 in the spot market. What will be your net profit?

2. You decided to get an adjustable-rate 30-year mortgage ($240,000). The interest rate is fixed at 4.3% for the first five years. After eight years the interest rate goes up to 9.4% and your loan balance is $180,431.87. Estimate your second mortgage payment.

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