Christoph Hoffeman of Kapinsky Capital believes the Swiss franc will appreciate versus the U.S. dollar in the coming3-month period. He has $100,000 to invest. The current spot rate is $0.5823/SF, the3-month forward rate is $0.5639/SF, and he expects the spot rates to reach $0.6252/SF in three months.

a. CalculateChristoph's expected profit assuming a pure spot market speculation strategy.

b. CalculateChristoph's expected profit assuming he buys or sells SF three months forward.

Vatic Capital.Cachita Haynes works as a currency speculator for Vatic Capital of Los Angeles. Her latest speculative position is to profit from her expectation that the U.S. dollar will rise significantly against the Japanese yen. The current spot rate is 119.00/$. She must choose between the following 90-day options on the Japaneseyen: LOADING...

.

a. Should Cachita buy a put on yen or a call onyen?

b. What isCachita's breakeven price on the option purchased in part a?

c. Using your answer from part a, what isCachita's gross profit and net profit(including premium) if the spot rate at the end of 90 days is 140.00/$?

a. Should Cachita buy a put on yen or a call onyen?(Select the best choicebelow.)

A.

Cachita should buy a put on yen to profit from the fall of the dollar(the rise of theyen).

B.

Cachita should buy a put on yen to profit from the rise of the dollar(the fall of theyen).

C.

Cachita should buy a call on yen to profit from the fall of the dollar(the rise of theyen).

D.

Cachita should buy a call on yen to profit from the rise of the dollar(the fall of theyen).

Henrik's Options. Assume Henrik writes a call option on euros with a strike price of $1.2500/ at a premium of 3.80 per euro ($0.0380/) and with an expiration date three months from now. The option is for 100,000. CalculateHenrik's profit or loss should he exercise before maturity at a time when the euro is traded spot at strike prices beginning at $1.11/, rising to $1.35/ in increments of $0.04.

The profit or loss should Henrik exercise before maturity at a time when the euro is traded spot at $1.11/ is $

negative 3,800.00

(Round to the nearest cent and indicate a loss by using a negativesign.)

The profit or loss should Henrik exercise before maturity at a time when the euro is traded spot at $1.15/ is $

(Round to the nearest cent and indicate a loss by using a negativesign.)

The profit or loss should Henrik exercise before maturity at a time when the euro is traded spot at $1.19/ is $

(Round to the nearest cent and indicate a loss by using a negativesign.)

The profit or loss should Henrik exercise before maturity at a time when the euro is traded spot at $1.23/ is $

(Round to the nearest cent and indicate a loss by using a negativesign.)

The profit or loss should Henrik exercise before maturity at a time when the euro is traded spot at $1.27/ is $

(Round to the nearest cent and indicate a loss by using a negativesign.)

The profit or loss should Henrik exercise before maturity at a time when the euro is traded spot at $1.31/ is $

(Round to the nearest cent and indicate a loss by using a negativesign.)

The profit or loss should Henrik exercise before maturity at a time when the euro is traded spot at $1.35/ is $