i sold a call option with an exercise price of $1.20/euro. the premium was $0.02/euro. what is my profit or loss if the exchange rate is $1.205/euro?
Q: If the exchange rate at time t is Et = €1/$. You invest $1 in an euro asset at t, which has an…
A: Future value of euro will be calculated by future value formula. Future value = Present value*(1+r)n…
Q: st rates in the U.S. andeuro are 4% and 6% respectively and the spot rate for Euro ($/€) is $1.1550,…
A: According to interest rate parity the forward rate and spot exchange rate both should be in…
Q: You purchased a put option on Australian dollars for RM0.02 per unit. The strike price was RM4.25,…
A: A buyer of put option expects the spot price to be below the strike price. The buyer of put option…
Q: Suppose the exchange rate of euro at current spot market is $1.25/€. If a put option has a strike…
A: Option can be in the money, out of the money and at the money
Q: Assume that the dollar-euro spot rate is $1.28 and the six-month forward rate is PT= S,ers - r=…
A: Call price or the pay off can be determined as below: Call Price>=MaxSpot rate-Strike…
Q: i sold a call option with an exercise price of $1.20/euro. the premium was $0.02/euro. what is my…
A: Buyer of call option will exercise the option if exchange rate is higher than the Exercise price For…
Q: For a call option of CN¥100,000 with the $0.16 exercise price and $0.0005 premium, When the spot…
A: A call option is a contractual agreement that gives the option buyer the right but not the…
Q: Suppose the spot exchange rate is $1.22 per British pound and the strike on a dollar denominated…
A: Put Option gives the holder right to buy the asset or stock on expiry date at strike price for…
Q: tractor has a cost of $ 1m for a given specification. If the current $: £ rate is 1.3500:1, i) What…
A: Exchange rate (ER) is a value at which two different currencies are exchanged or traded. To make…
Q: Suppose a Foreign Exchange call option is available on the Euro (€) with a strike price of $1.138.…
A: The Black and Scholes option pricing model: The Black and Scholes option pricing model is considered…
Q: Assume that the current price of a Big Mac in the United States today is $5.75. Assume also that…
A: Big Mac in the United States = $5.75 Big Mac in Peru =10.50 sol USDPEN exchange rate = 3.7400 sol…
Q: Currently, you canexchange 1 euro for 1.25 dollars in the 180-dayforward market, and the risk-free…
A: Interest rate parity states that after adjusting for risk, investors would expect to receive the…
Q: If the exchange rate at time t is Et = €1/$. You invest $1 in an euro asset at t, which has an…
A: Exchange Rate at t =∈1/ $ Investment of $1
Q: You trade in two types of options. First, you purchase 7 call option contracts on the Euro with an…
A: Calculation of the profit or loss by participating in options is shown below:
Q: Consider a one-period binomial model in which the underlying is at 65 Euros, and can go up 30% or…
A: Note: This question has two questions. The first has been solved below: The single period binomial…
Q: d) You observe the following exchange rates in the market. i) $1 = 0.85 euros and 1 krona = $…
A:
Q: Mr. Sami contacted his FOREX trader and was informed with the following: the spot rate is USD…
A: A rate through which individuals or companies convert their domestic currency with the other…
Q: A) Assume you are an exporter and you want to sell USD that you have received as export remittance.…
A: Part (A): Answer: The exchange rate of 1 USD is INR 1/65.12 - INR 1/65.10 Calculation of exchange…
Q: You have sold a put option on British pound and receive $0.03 per pound. The exercise price is $0.75…
A: The option is exercised by the buyer of the option when they earn a profit on executing the…
Q: You have entered in a put option contract on British pound at a price of $0.04 per British pound.…
A: Put option contract is a kind of financial derivative contract in which the owner of the contract…
Q: e is a European call option on the dollar with strike price of Kc = 94 pence per dollar and a…
A: The call option gives opportunity to buy the stock on expiration but no obligations to do that and…
Q: A Japanese exporter has a €1,000,000 receivable due in one year. To hedge the position, you will buy…
A: A put option is an instrument which provides its holder an option to sell an underlying asset on a…
Q: he following are the spot and the swap forward rates of the AUD/USD Spot…
A: A spot rate, or spot cost, addresses a contracted cost for the buy or offer of an item, security, or…
Q: American Express sells a call option on euros (contract size is €500,000) at a premium of $0.04 per…
A: Here, Contract size = €500,000 Call Premium = $0.04 per euro. Exercise price = $0.91 Spot price of…
Q: Consider the position of a call writer who sold a call option on Australian dollars at an exercise…
A: Given, Exercise price = $US0.7600/$A Exercise date = $US0.7475/$A, $US0.7550/$A, $US0.7600/$A,…
Q: a. Should Cachita buy a put on yen or a call on yen? b. What is Cachita's breakeven price on the…
A: Put Option: A put option allows the buyer of the option the right and not the obligation to sell…
Q: You purchased a put option on British pounds for RM0.06 per unit. The strike price was RM5.60 and…
A: The question is related to speculating with currency put option.
Q: Suppose you have developed a hairbrained scheme to purchase art, mint a NFT, and then sell it for a…
A: Exchange rate: It is the rate or price at which two currencies are exchanged.
Q: A speculator has purchased United States dollar put options, with an exercise price of A$1.30 and a…
A: Put Options are exchange traded contracts where an investor can acquire rights for selling its share…
Q: What is the present value of a cashflow of EUR 5,327.21 arising in 276 days, using 4.2% as the rate…
A: “Since you have posted multiple questions, we will solve first question for you. If you want any…
Q: The current spot exchange rate is $1.22/€ and the three-month forward rate is $1.30/€. You enter…
A: Three month forward rate = $1.30/€ Spot exchange rate at maturity = $1.50/€
Q: Consider the option on currency HKD against the USD: Current spot rate is HKD7.50 for 1 USD: ·…
A: Hi there, thanks for posting the questions. But as per our Q&A guidelines, we must answer the…
Q: A speculator has purchased United States dollar put options, with an exercise price of A$1.30 and a…
A: A put option is an instrument which provides its holder an option to sell an underlying asset on a…
Q: Mr. Sami approached his FOREX trader and was informed that the spot rate is EUR 2.1565/OMR. The…
A: Option a is correct.
Q: Suppose that the exchange rate is €1.25 = £1.00.Options (calls and puts) are available on the…
A: option 4 is correct sell 10 call options on the euro with a strike in dollars.
Q: You have the following spot bid and ask rates between the Australian dollar (AUD), the Danish krone…
A: Here, We have assumed investment of AUD 1,000
Q: The graph below shows contingency net profits for a buyer of a Swiss franc (CHI straddle, in which…
A: Call premium is $0.03 Put Premium is $0.04 Exercise Price is $1.09 per CHF Strategy used is Straddle…
Q: Suppose a U.S. investor wishes to invest in a British firm currently selling for £24 per share. The…
A: In International Investments, exchange rate is a significant factor which is required to be analyzed…
Q: For a call option of CN¥100,000 with the $0.16 exercise price and $0.0005 premium, When the spot…
A: A call option is an option contract which gives the holder the right but not an obligation to buy…
Q: A call option allows the holder to buy USD100,000 at an exercise exchange rate of 1.8000 (AUD/USD).…
A: Formula to calculate Net payoff = (max(St - X, 0) - Premium paid) * Number of USD to be bought St =…
Q: If the exchange rate is such that $1 equals 5 euros, then the price of a euro is $5 $1 $0.40 $0.20
A: The exchange rate is the currency value of one country in term of the currency of another country.…
Q: For a call option of CN¥100,000 with the $0.16 exercise price and $0.0005 premium, When the spot…
A: Call option Call option provided the right to its holder to buy the underlying security at the…
i sold a call option with an exercise price of $1.20/euro. the premium was $0.02/euro. what is my profit or loss if the exchange rate is $1.205/euro?
Step by step
Solved in 2 steps
- Suppose that the exchange rate is 0.60 dollars per Swiss franc. If the franc appreciates 10% against the dollar, how many francs would a dollar buy tomorrow?i sold a call option with an exercise price of $1.20/euro. the premium was $0.02/euro. what is my profit or loss if the exchange rate is $1.18/euro?For a call option of CN¥100,000 with the $0.16 exercise price and $0.0005 premium, When the spot exchange rate is $0.1602, the profit from exercising the call (in total) is US$
- Suppose a European call option to buy 1 euro for 1.40 CAD costs 0.08 CAD. The option maturity is in two months and the forward exchange rate for the same maturity is 1.50 CAD per euro. What arbitrage opportunity exists? Explain how you can exploit this opportunity and how much the profit is. (Ignore the time value of money)You purchased a put option on Australian dollars for RM0.02 per unit. The strike price was RM4.25, and the spot rate at the time the option was exercised was RM4.38. Assuming that there are 13,830 units in the Australian dollar option.Would you exercise the option? What will your net profit on the put option？You purchase a futures contract in euros for $170,000. The trading unit is 125,000 euros. What is the ratio of cents to euros in this contract? (Divide the dollar con- tract size by the size of the trading unit.) Assume you are required to put up $4,000 in margin and the euro increases by 3¢ (per euro). What will be your return as a percentage of margin?
- You purchased a put option on British pounds for RM0.06 per unit. The strike price was RM5.60 and the spot rate at the time the pound option was exercised was RM5.68. Assume there are 47,580 units in a British pound option. What was your net profit on the option？The current spot GBP/USD rate is 1.9455 and the three-month forward rate is 1.9173. Based on your analysis of the exchange rate, you are pretty confident that the spot exchange rate will be 1.9252 in three months. Assume that you would like to trade £5,000,000 in the forward market. What would be your speculative profit in dollar terms if the spot exchange rate actually turns out to be 1.9000. (USD, no cents)A European put option contract with an exercise price of $1.65 per pound and a contract size of £32,000 is currently trading at a premium of $0.18 per pound. Required: a-1. If you buy this contract, what spot exchange rate at maturity will maximize your profit? a-2. If you buy this contract, what is the amount of the maximum possible profit from one contract? b. If you buy this contract, what is your maximum possible loss from one contract? c. If you sell this contract, what is your maximum possible profit on this contract? d-1. If you sell this contract, what is your maximum possible loss from one contract? d-2. At what future spot exchange rate will you maximize your loss? e. At what future spot exchange rate, will either the buyer or seller of this contract break even?
- You expect to incur a cost and make a payment of €35,000 in one year. The currentEUR/GBP exchange rate is £0.92 per euro. The current 1-year interest rates are:GBP 4%, EUR 5%. Explain what kind of risk you might be facing in the situationdescribed above. Provide an example of a forward contract that you would use inorder to hedge against the relevant exchange rate risk. Analyse the possibleoutcomes of your strategy if the EUR/GBP exchange rate in one year is (1) £0.89per euro, and (2) £0.98 per euro.American Express sells a call option on euros (contract size is €500,000) at a premium of $0.04 per euro. If the exercise price is $0.91 and the spot price of the euro at date of expiration is $0.93, what is American express’s profit or loss on this call option?A Japanese exporter has a €1,000,000 receivable due in one year. To hedge the position, you will buy put options on euro True or False?
