On 19 April Following are the Spot Rates Spot EUR/USD 1.2000 USD/INR 44.8000 Following are the quotes for European Type Options Currency Pair Call/Put Strike Price Premium Expiry Date EUR/USD Call 1.2000 $0.035 July 19 EUR/USD Put 1.2000 $0.04 July 19 USD/INR Call 44.8000 Rs.0.12 Sep 19 USD/INR Put 44.8000 Rs.0.04 Sep 19 A Dealer believes that the spot rate for the Dollar will rise to INR 45.00 by September 19. So he decides to buy at the money call options. If his expectations are correct, his profit from BUYING call options FOR USD1.5 Million will be INR______. a. 110,000 b. 100,000 c. 120,000 d. 80,000

On 19 April Following are the Spot Rates Spot EUR/USD 1.2000 USD/INR 44.8000 Following are the quotes for European Type Options Currency Pair Call/Put Strike Price Premium Expiry Date EUR/USD Call 1.2000 $0.035 July 19 EUR/USD Put 1.2000 $0.04 July 19 USD/INR Call 44.8000 Rs.0.12 Sep 19 USD/INR Put 44.8000 Rs.0.04 Sep 19 A Dealer believes that the spot rate for the Dollar will rise to INR 45.00 by September 19. So he decides to buy at the money call options. If his expectations are correct, his profit from BUYING call options FOR USD1.5 Million will be INR______. a. 110,000 b. 100,000 c. 120,000 d. 80,000

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter5: Currency Derivatives

Section: Chapter Questions

Problem 31QA

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Study this Case and Answer Question Asked Below: On 19 April Following are the Spot Rates Spot EUR/USD 1.2000 USD/INR 44.8000 Following are the quotes for European Type Options Currency Pair Call/Put Strike Price Premium Expiry Date EUR/USD Call 1.2000 $0.035 July 19 EUR/USD Put 1.2000 $0.04 July 19 USD/INR Call 44.8000 Rs.0.12 Sep 19 USD/INR Put 44.8000 Rs.0.04 Sep 19 If a dealer is Bullish on USD. He should a. Sell EUR/USD Put Option b. Buy EUR/USD Call Option c. Buy EUR/USD Put Option d. None of the above
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Currency Pair	Call/Put	Strike Price	Premium	Expiry Date
EUR/USD	Call	1.2000	$0.035	July 19
EUR/USD	Put	1.2000	$0.04	July 19
USD/INR	Call	44.8000	Rs.0.12	Sep 19
USD/INR	Put	44.8000	Rs.0.04	Sep 19