Question
Janes works as a currency speculator for RBC. Her latest speculative position is to profit from her expectation that US dollar will rise against Canadian
Janes works as a currency speculator for RBC. Her latest speculative position is to profit from her expectation that US dollar will rise against Canadian dollar. The current spot rate is CAD1.32/USD. She has bought the American call option on the CAD with strike price of CAD1.35/USD in 3 month. The cost of the call is CAD$2 per contract. Each contract allow her to sell 1000 USD in exchange for 1350 CAD. She brought 50 unit of contracts.
If the spot price in 1 month is CAD1.32/USD, what is her profit or loss?
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Fundamentals Of Corporate Finance
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
5th Global Edition
9781292437156
