a) Assume the euro's spot price at the expiration date (market price) is ¥139/€ The investor's profit = ¥/€ b) Assume the euro's spot price at the expiration date (market price) is ¥118/€ The investor's profit = ¥/€ c) What is the maximum loss Maximum loss = ¥/€
An investor is expecting that the euro either will sharply increase or sharply decrease against the Japanese Yen. The investor purchases 2 options
1) a currency put option on the euro with a strike price (exchange rate) of ¥127/€. When the investor purchases the contract, the spot rate of the euro is equivalent to ¥127/€. the premium is ¥2/€
2) a currency call option on the euro with a strike price (exchange rate) of ¥127/€. When the investor purchases the contract, the spot rate of the euro is equivalent to ¥127/€. the premium is ¥1/€
a) Assume the euro's spot price at the expiration date (market price) is ¥139/€
The investor's profit = ¥/€
b) Assume the euro's spot price at the expiration date (market price) is ¥118/€
The investor's profit = ¥/€
c) What is the maximum loss
Maximum loss = ¥/€
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