Question
1. Compute the forward discount or premium for the Canadian dollar whose 90-day forward rate is $1.2785 and spot rate is $1.2536. State whether your
1. Compute the forward discount or premium for the Canadian dollar whose 90-day forward rate is $1.2785 and spot rate is $1.2536. State whether your answer is a discount or premium.
2. An investor purchased a call option on British pounds for $.02 per unit. The strike price was $1.30 and the spot rate at the time the option was exercised was $1.33. Assume there are 31,250 units in a British pound option. What was the net profit on this option?
3. An investor purchased a put option on British pounds for $.03 per unit. The strike price was $1.30 and the spot rate at the time the pound option was exercised was $1.33. Assume there are 31,250 units in a British pound option. What was Alices net profit on the option?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started