Answered step by step
Verified Expert Solution
Question
1 Approved Answer
1. Hedging with Currency Options When would a U.S. firm consider purchasing a call option on Canadian dollars for hedging? When would a U.S. firm
1. Hedging with Currency Options When would a U.S. firm consider purchasing a call option on Canadian dollars for hedging? When would a U.S. firm consider purchasing a put option on Canadian dollars for hedging? (1 point) 2. Speculating with Currency Options When should a speculator purchase a call option on euros? When should a speculator purchase a put option on euros? ( 1 point) 3. Speculating with Currency Call Options Randy Rudecki purchased a call option on British pounds for $.02 per unit. The strike price was $1.15, and the spot rate at the time the option was exercised was $1.19. Assume there are 31,250 units in a British pound option. What was Randy's net profit on this option? (Hint: calculate the net profit per unit first, then multiply profit per unit by number of units) (1 point) 4. Speculating with Currency Put Options Alice Duever purchased a put option on British pounds for $.03 per unit. The strike price was $1.18, and the spot rate at the time the pound option was exercised was $1.16. Assume there are 31,250 units in a British pound option. What was Alice's net profit on the option? (1 point) 5. Selling Currency Call Options Mike Suerth sold a call option on Canadian dollars for $.02 per unit. The strike price was $.77, and the spot rate at the time the option was exercised was \$.74. Assume Mike did not obtain Canadian dollars until the option was exercised. Also assume that there are 50,000 units in a Canadian dollar option. What was Mike's net profit on the call option? (1 point) 6. Selling Currency Put Options Brian Tull sold a put option on Canadian dollars for $.02 per unit. The strike price was $.78, and the spot rate at the time the option was exercised was \$.75. Assume Brian immediately sold off the Canadian dollars received when the option was exercised. Also assume that there are 50,000 units in a Canadian dollar option. What was Brian's net profit on the put option? (1 point) 1. Hedging with Currency Options When would a U.S. firm consider purchasing a call option on Canadian dollars for hedging? When would a U.S. firm consider purchasing a put option on Canadian dollars for hedging? (1 point) 2. Speculating with Currency Options When should a speculator purchase a call option on euros? When should a speculator purchase a put option on euros? ( 1 point) 3. Speculating with Currency Call Options Randy Rudecki purchased a call option on British pounds for $.02 per unit. The strike price was $1.15, and the spot rate at the time the option was exercised was $1.19. Assume there are 31,250 units in a British pound option. What was Randy's net profit on this option? (Hint: calculate the net profit per unit first, then multiply profit per unit by number of units) (1 point) 4. Speculating with Currency Put Options Alice Duever purchased a put option on British pounds for $.03 per unit. The strike price was $1.18, and the spot rate at the time the pound option was exercised was $1.16. Assume there are 31,250 units in a British pound option. What was Alice's net profit on the option? (1 point) 5. Selling Currency Call Options Mike Suerth sold a call option on Canadian dollars for $.02 per unit. The strike price was $.77, and the spot rate at the time the option was exercised was \$.74. Assume Mike did not obtain Canadian dollars until the option was exercised. Also assume that there are 50,000 units in a Canadian dollar option. What was Mike's net profit on the call option? (1 point) 6. Selling Currency Put Options Brian Tull sold a put option on Canadian dollars for $.02 per unit. The strike price was $.78, and the spot rate at the time the option was exercised was \$.75. Assume Brian immediately sold off the Canadian dollars received when the option was exercised. Also assume that there are 50,000 units in a Canadian dollar option. What was Brian's net profit on the put option? (1 point)
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