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 $0.750/C$. Carla may choose between the following options on the Canadian dollar: Each option contract will exchange CAD1,000 or its equivalent USD value. | |||||
Option |
| Strike Price |
| Premium | |
Put on C$(allow the option holder to sell canadian dollar at strike price) |
| $0.7200/C$ |
| USD0.0004/CAD | |
Call on C$(allow the option holder to buy canadian dollar at strike price) |
| $0.7200/C$ |
| USD0.0003/CAD | |
|
What is Carla's net profit (including premium) in USD if she sells the 50 put contracts on C$ and the ending sport rate is US0.76/C$? (Please answer in Decimal format with 2 decimal places, e.g. 10.00 not USD10.00)
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