Question
(Ch. 5) Selling Currency Put Options. David sold a put option on the New Zealand dollar (NZD) for the premium at USD .05 per unit.
(Ch. 5) Selling Currency Put Options. David sold a put option on the New Zealand
dollar (NZD) for the premium at USD .05 per unit. The strike price was USD .62 (the
exchange rate we use is NZDUSD), and the spot rate at the time the option was
exercised was USD .58. Assume David immediately sold off the NZD received when
the option was exercised. Also, assume that there are 50,000 units in an NZD option.
What was David's net profit on the put option? (4 points)
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Earnings Quality
Authors: Andrew P.C.
1st Edition
1521507724, 978-1521507728
