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A speculator has purchased United States dollar put options, with an exercise price of AS1.50 and a premium of ASO.10 per unit. (a) Calculate the
A speculator has purchased United States dollar put options, with an exercise price of AS1.50 and a premium of ASO.10 per unit. (a) Calculate the break-even price. ( 1 mark) (b) Calculate the profit or loss of the option for the speculator if the spot rate at the time the speculator considers exercising the options is: (1) AS1.35 (2) AS1.45 (3) A\$1.55 (6 marks) (c) What is the maximum profit and maximum loss for the speculator? (2 marks)
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