1. A put option on Canadian dollars with a strike price of $.60 is purchased by a speculator for a premium of $.03 per unit. If the Canadian dollar’s spot rate is $.55 at the time the options is exercised, what is the net profit per unit to the speculator? (a) $0.20 (b) $0.00 (c) $0.03 (d) $0.05 2. A call option on Canadian dollars with a Strike price of $.60 is purchased by a speculator for a premium of $.05 per unit. If the Canadian dollar’s spot rate is $.65 at the time the options is exercised, what is the net profit per unit to the speculator? (a)$0.03 (b) $0.05 (c) $0.02 (d) $0.00

1. A put option on Canadian dollars with a strike price of $.60 is purchased by a speculator for a premium of $.03 per unit. If the Canadian dollar’s spot rate is $.55 at the time the options is exercised, what is the net profit per unit to the speculator? (a) $0.20 (b) $0.00 (c) $0.03 (d) $0.05 2. A call option on Canadian dollars with a Strike price of $.60 is purchased by a speculator for a premium of $.05 per unit. If the Canadian dollar’s spot rate is $.65 at the time the options is exercised, what is the net profit per unit to the speculator? (a)$0.03 (b) $0.05 (c) $0.02 (d) $0.00

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter5: Currency Derivatives

Section: Chapter Questions

Problem 19QA

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A call option on Canadian dollar has a strike (exercise) price of $0.75 per CAD. The present CAD exchange rate is $0.77 per CAD. This CAD call option has an intrinsic value of: A) Positive $0.02 per CAD. B) Zero intrinsic value. C) Negative $0.02 per CAD. D) Positive $0.75 per CAD.
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