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An investor is bullish on the euro and believes it will increase against the Japanese Yen. The investor purchases a currency call option on the

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An investor is bullish on the euro and believes it will increase against the Japanese Yen. The investor purchases a currency call option on the euro with a strike price (exchange rate) of 127/. When the investor purchases the contract, the spot rate of the euro is equivalent to 124/. Assume the euro's spot price at the expiration date (market price) is 135/. the premium is 2/ a) Assume the euro's spot price at the expiration date (market price) is 135/C The investor's profit =/C b) Assume the euro's spot price at the expiration date (market price) is 122/. The investor's profit =/C c) What is the maximum loss Maximum loss =/C

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