(Mini-case) A speculator is considering the purchase of 4 three-month Japanese yen PUT options with a striking price of 96 cents ($0.96) per 100 yen. The premium is 1.17 cents per 100 yen. The spot price is 95 cents per 100 yen and the 90-day forward rate is 95.71 cents. The speculator believes the yen will depreciate to 86 cents per 100 yen over the next three months. (Note the size of one yen contract is ¥1,000,000). As the speculator's assistant,determine the speculator's profit if the yen appreciates to 86 cents per 100 yen (keep one decimal, e.g., 1200.4)

(Mini-case) A speculator is considering the purchase of 4 three-month Japanese yen PUT options with a striking price of 96 cents ($0.96) per 100 yen. The premium is 1.17 cents per 100 yen. The spot price is 95 cents per 100 yen and the 90-day forward rate is 95.71 cents. The speculator believes the yen will depreciate to 86 cents per 100 yen over the next three months. (Note the size of one yen contract is ¥1,000,000). As the speculator's assistant,determine the speculator's profit if the yen appreciates to 86 cents per 100 yen (keep one decimal, e.g., 1200.4)

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter11: Managing Transaction Exposure

Section: Chapter Questions

Problem 6ST

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