You have sold a put option on British pound and receive $0.03 per pound. The exercise price is $0.75 per British pound and at expiration the exchange rate was 1.5 British pound per dollar. Compute the net profit if the size of contract is 31,250. a. Net loss $1,666.67 b. Net profit $1,666.67 c. Net profit $0 d. Net loss $3,541.67

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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You have sold a put option on British pound and receive $0.03 per pound. The exercise price is
$0.75 per British pound and at expiration the exchange rate was 1.5 British pound per dollar.
Compute the net profit if the size of contract is 31,250.
a. Net loss $1,666.67
b.
Net profit $1,666.67
c. Net profit $0
d. Net loss $3,541.67
Transcribed Image Text:You have sold a put option on British pound and receive $0.03 per pound. The exercise price is $0.75 per British pound and at expiration the exchange rate was 1.5 British pound per dollar. Compute the net profit if the size of contract is 31,250. a. Net loss $1,666.67 b. Net profit $1,666.67 c. Net profit $0 d. Net loss $3,541.67
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