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Red Corporation has a 90-day call option for $100,000 at a strike price of P52.25. As of today, the selling spot rate is P52.30/dollar while the buying spot rate is P52.13/dollar. What| is the current position of Red Corporation with regard to its call option?
a.) in-the-money by 12,000
b.) in-the-money by 5,000
c.) out-the-money by12,000
d.) out-the-money by 5,000
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- Mender Co. will be receiving 700,000 Australian dollars in 180 days. Currently, a 180-day call option with an exercise price of $.74and a premium of $.02 is available. Also, a 180-day put option with an exercise price of $.72 and a premium of $.02 is available. Mender plans to purchase options to hedge its receivables position. Assume that the spot rate in 180 days is $.73. (1) Should the company use call options or put options? Why? (2) Calculate the amount received from the currency option hedge (after considering the premium paid). (3) Would the company have received more without hedging?Jobbar sold a put option on British pounds for €.035 per unit. The exercise price was €1.1370, and the spot rate at the time the pound option was exercised was €1.1218. Assume there are 150,250 units in a British pound option. What was Jobbar's per-unit net profit on the option? What was Jobbar's total net profit on the option? Calculate the break-even spot rate (at expiration) for Jobbar. Discuss (briefly) the answer.FAB Corporation will need 200,000 Canadian dollars (C$) in 90 days to cover a payable position. Currently, a 90-day call option with an exercise price of $.75 and a premium of $.01 is available. Also, a 90-day put option with an exercise price of $.73 and a premium of $.01 is available. FAB plans to purchase options to hedge its payable position. Assuming that the spot rate in 90 days is $.71, what is the net amount paid, assuming FAB wishes to minimize its cost? A. $152,000. B. $144,000. C. $150,000. D. $148,000.
- Nanno Company offers its investors option contracts to buy their shares at a price of P50. Currently, the value of their stocks in the market stands at P60. The 52-week high of the share price is P83 and its 52-week low is P47. The treasury bill issued by the government yields 8.25% currently. REQUIRED: What’s the probability for the up move? What’s the probability for the down move? How much is the total option pay off for the stock? What should be the reasonable price of the option contracts of the company?ABC purchased a put option for $10,000 at a premium of P7,000. The exercise price is P52.10 per dollar. On the balance sheet date, the selling rate is P51.90 while the buying spot rate is P51.50. As of this date, the option is _____. Anser in the following format: OUT-5000 if answer is OUT-the-money by P5,000. Captalize.Suppose you buy a 100-strike call at a premium of $19.46, sell a 120-strikecall at a premium of $11.26, sell a 100-strike put at a premium of $5.45,and buy a 120-strike put at a premium of $15.68. Assume effective annualrisk-free interest rate of 8.5% and the expiration date of the options is oneyear.(a) Verify that there is no price risk in this transaction.(b) What is the initial cost of the position?(c) What is the value of the position at expiration?
- The company offered its investors option contracts to buy their shares at P72 with the current price of P90. They were only given 90 days to exercise their rights. 52 week-high for the stock is P95 while the 52-week low is P70. The T-bill rate is 7.32%. REQUIRED: Value of Nd1. (Use 4 decimal places) Value of Nd2. (Use 4 decimal places) Volatility rate. (Use percentage and at least, two decimal places) Value of the call option. (Use two decimal places) Value of the put options. (Use two decimal places)Assume that Smith Corporation will need to purchase 200,000 British pounds in 90 days. A call option exists on British pounds with an exercise price of $1.68, a 90-day expiration date, and a premium of $.04. A put option exists on British pounds, with an exercise price of $1.69, a 90-day expiration date, and a premium of $.03. Smith Corporation plans to purchase options to cover its future payables. It will exercise the option in 90 days (if at all). It expects the spot rate of the pound to be $1.76 in 90 days. Determine the amount of dollars it will pay for the payables, including the amount paid for the option premium. A. $336,000. B. $344,000. C. $332,000. D. $360,000. E. $338,000.ABC Corporation plans to purchase a call option for 1,000 Red Corp. ordinary shares at a strike price of P489 per share. The contract will be exercisable four months from purchase. The details about the underlying asset are as follows: Market value per share 534.00 Volatility 10% Risk-free rate 3% If the call option is currently selling at P40,000, it is currently over or (under) valued by how much? Use 360 days in a year.
- Three months ago, you sold a put option contract on Swiss franc with a strike price of $.60/SF and an option price of $.0060 per SF. Contract size is 10,000 SF. The option expires today when the value of Swiss franc is $.625. What is your total profit or loss on your investment? A. -$310 B. -$60 C. $0 D. $60BCD Company offer its investors option contracts to buy their shares at a price of P50. Currently, the value of their stocks in the market stands at P60. The 52-week high of the share price is P83 and its 52-week low is P47. The treasury bill issued by the government yields 8.25% currently. What’s the probability for the up move?Suppose you buy GM put for P3, which matures in two months with a strike price of P60. GM is currently trading at P62.75. If the stock price of GM falls to P57 on the expiration date of the option, the rate of return of your put is at what amount?