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A Bear spread strategy is combined: (1) Buying two put option with the strike price of$1.630/GBP and an option premium of 2.63 cents/GBP (2) Selling
A Bear spread strategy is combined:
(1) Buying two put option with the strike price of$1.630/GBP and an option premium of 2.63 cents/GBP
(2) Selling two put option with the strike price of$1.6150/GBP and an option premium of 0.15 cents/GBP
The break-even price ofbuying 2 put option in this case (1 mark)
The break-even price of selling 2 put option in this case (1 mark)
For what range of spot rate would this strategy lead to get a profit? (1.5 marks)
For what range of spot rate would this strategy lead to gain loss? (1.5 marks)
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