1a) Suppose you have to pay 10,000,000 Japanese yen (Y) in 6 months. You have the following information:

6-month forward rate: Y120/$, plus $3,000 forward contract fee payable in 6 months,

6-month call option: strike price of Y125/$, plus 3% premium payable in 6 months.

Six months form now, in USD, the above forward contract will cost ____, and the call option will cost _____.

Group of answer choices

$86,333, $82,400

$83,333, $80,000

$80,333, $77,273

$86,060, $83,000

$86,333, $82,727

1b) Jimmy Pools bought a 90- day American put option contract on 50,000 two weeks agowhen the spot rate was $1.520/. We have the following information:

Current spot rate: $1.500/,

90-day forward rate: $1.550/,

The put option has a strike price of $1.540/ and a premium of 2%.

What is the current exercise value of the contract?

$2,000

-$500

-$480

$480

This option contract cannot be exercised until the maturity date, therefore, its exercise value cannot be determined.