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Consider the following information regarding 1 Million South African rand call and put European style option contracts expiring October 1. The current underlying (current spot
Consider the following information regarding 1 Million South African rand call and put European style option contracts expiring October 1. The current underlying (current spot market rate) of 1 rand =0.058 The forward rate for October 1 is 1 rand =0.063 Finally, the rand is expected to trade, at the low end: 1 rand =0.059 and on the high end 1 rand =0.064, and the interest rate in Germany is 1%. A. Given this information the minimum profit one could make on each 1 million rand contract is euro, using an option contract and the forward market. B. For the given range of values for the rand, the most one could expect to make on each 1 million rand contract is euro, using an option contract and the forward market. Consider the following information regarding 1 Million South African rand call and put European style option contracts expiring October 1. The current underlying (current spot market rate) of 1 rand =0.058 The forward rate for October 1 is 1 rand =0.063 Finally, the rand is expected to trade, at the low end: 1 rand =0.059 and on the high end 1 rand =0.064, and the interest rate in Germany is 1%. A. Given this information the minimum profit one could make on each 1 million rand contract is euro, using an option contract and the forward market. B. For the given range of values for the rand, the most one could expect to make on each 1 million rand contract is euro, using an option contract and the forward market
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