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An investor is expecting that the euro either will sharply increase or sharply decrease against the Japanese Yen. The investor purchases 2 options 1) a

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An investor is expecting that the euro either will sharply increase or sharply decrease against the Japanese Yen. The investor purchases 2 options 1) a currency put option on the euro with a strike price (exchange rate) of 126/. When the investor purchases the contract, the rate of the euro is equivalent to 125/. the premium is 1/ 2) a currency call option on the euro with a strike price (exchange rate) of 126/. When the investor purchases the contract, th rate of the euro is equivalent to 125/. the premium is 2/ a) Assume the euro's spot price at the expiration date (market price) is 137/ The investor's profit =/ b) Assume the euro's spot price at the expiration date (market price) is 118/ The investor's profit =/

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