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H.G. Wells & Co. sold a one year put option on Canadian dollars for $.02 per unit when the Canadian dollar was trading at $.80.
H.G. Wells & Co. sold a one year put option on Canadian dollars for $.02 per unit when the Canadian dollar was trading at $.80. The strike price was $.76, and the spot rate at the time the option was exercised was $.72. Assume H.G. Wells immediately sold off the Canadian dollars received when the option was exercised. Also assume that there are 50,000 units in a Canadian dollar option. What was H.G. Wells net profit on the put option it sold?
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