Question
Carla works for CIBC Currency Funds in Toronto. She believes the Canadian dollar (C$) will appreciate versus the U.S. dollar over the coming 90 days.
| Carla works for CIBC Currency Funds in Toronto. She believes the Canadian dollar (C$) will appreciate versus the U.S. dollar over the coming 90 days. The current spot rate is CAD1.28/USD. Carla may choose between the following options: Each option contract will exchange USD1,000 or its equivalent CAD value. | |||||
| Option |
| Strike Price |
| Premium | |
| Put on USD(allow the option holder to sell USD at strike price) |
| CAD1.25/USD |
| CAD0.004/USD | |
| Call on USD(allow the option holder to buy USD at strike price) |
| CAD1.25/USD |
| CAD$0.003/USD | |
|
| |||||
What is Carla's net profit (including premium) in USD if she buy the 100 call contracts on C$ and the ending sport rate is CAD1.28/USD?
a.
2700
b.
-300
c.
27
d.
3000
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Economics And Personal Finance
Authors: Irvin Tucker, Joan Ryan
1st Edition
1133562108, 978-1133562108
