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A speculator is considering the purchase of five three-month Euro put options with a striking price of 112 cents per Euro. The premium is .65

image text in transcribed A speculator is considering the purchase of five three-month Euro put options with a striking price of 112 cents per Euro. The premium is .65 cents Euro. The spot price is $1.1250/ and the 90-day forward rate is $1.1025/. The speculator believes the Euro will depreciate to $1.1050/ over the next three months. As the speculator's assistant, you have been asked to prepare the following: 1. Graph the put option cash flow schedule. 2. Determine the speculator's profit if the Euro depreciates to $1.1150/. 3. Determine the speculator's profit if the Euro only depreciates to the forward rate. 4. Determine the future spot price at which the speculator will only break even. 5. Determine the profit if the Euro depreciates to the speculator's belief of $1.1050/ A speculator is considering the purchase of five three-month Euro put options with a striking price of 112 cents per Euro. The premium is .65 cents Euro. The spot price is $1.1250/ and the 90-day forward rate is $1.1025/. The speculator believes the Euro will depreciate to $1.1050/ over the next three months. As the speculator's assistant, you have been asked to prepare the following: 1. Graph the put option cash flow schedule. 2. Determine the speculator's profit if the Euro depreciates to $1.1150/. 3. Determine the speculator's profit if the Euro only depreciates to the forward rate. 4. Determine the future spot price at which the speculator will only break even. 5. Determine the profit if the Euro depreciates to the speculator's belief of $1.1050/

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