Assume that a speculator purchases a put option on British pounds (with a strike price of $1.50) for $.05 per unit. A pound option represents 31,250 units. Assume that at the time of the purchase, the spot rate of the pound is $1.51 and continually rises to $1.58 by the expiration date. The highest net profit possible for the speculator based on the information above is: $1,562.50. $1,562.50. $937.50 $625.00.

The 90-day forward rate for the euro is $1.08, while the current spot rate of the euro is $1.05. What is the annualized forward premium or discount of the euro? 11.4% discount 11.4% premium 7.6% premium 7.6% discount

The greater the variability of a currency, the _____ will be the premium of a call option on this currency, and the _____ will be the premium of a put option on this currency, other things equal. greater; lower greater; greater lower; greater lower; lower

A U.S. firm exports products to a German firm and will receive payment of 200,000 in three months. On June 1, the spot rate of the euro was $1.12, and the 3-month forward rate was $1.10. On June 1, the firm negotiated a forward contract with a bank to sell 200,000 forward in three months. The spot rate of the euro on September 1 is $1.15. the firm will receive $_______ for the euros. 224,000 230,000 220,000 200,000