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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 #126/6. When the investor purchases the contract, the spot rate of the euro is equivalent to 127/6, the premium is M 2) a currency call option on the euro with a strike price (exchange rate) of 4126/6. When the investor purchases the contract the spot rate of the euro is equivalent to W127/. the premium is 27 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 114/6 The investor's profit WE c) What is the maximum loss Maximum loss WIE

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