Question: Assume an American firm takes a long position on British Pound call options. The premium is $0.05, and the strike price is $1.45. When

Assume an American firm takes a long position on British Pound call options. The premium is $0.05, and the strike price is $1.45. When the firm executed the option, they were able to save $150,000 total. If the total contracts were enough to buy 560,000 pounds, what was the asking price of the pound in US dollars?

Step by Step Solution

★★★★★

3.48 Rating (164 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Solutions Porgit on Jong Call option SKP IN S Price the underlying ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

On Monday morning, an investor takes a long position in a pound futures contract that matures on Wednesday afternoon. The agreed-upon price is $1.78 for 62,500. At the close of trading on Monday, the...

Bama Corp. has sold British pound call options for speculative purposes. The option premium was $.06 per unit, and the exercise price was $1.58. Bama will purchase the pounds on the day the options...

Eric and Mary are now retired. They were able to retired early after selling Marys business. This practice set will not build on previous information, but will use the basic information, SS#,...

The futures price of an asset is currently 78 and the risk-free rate is 3%. A six-month put on the futures with a strike price of 80 is currently worth 6.5. What is the value of a six-month call on...

16.22. The futures price of an asset is currently 78 and the risk-free rate is 3%. A six-month put on the futures with a strike price of 80 is currently worth 6.5. What is the value of a sixmonth...

An investor holds a long position in two call options that are currently worth $8 and $3. The respective strike prices are $55 and $65. He also holds a short position on two call options worth $5 at...

A bond issued by Standard Oil worked as follows. The holder received no interest. At the bonds maturity the company promised to pay $1,000 plus an additional amount based on the price of oil at that...

A futures price is currently 25, its volatility is 30% per annum, and the risk-free interest rate is 10% per annum. What is the value of a nine-month European call on the futures with a strike price...

A U.S. company expects to purchase 1,000,000 in merchandise from an Italian supplier in 4 months. To protect against a weakening U.S. dollar, on June 1 the company pays $11,000 for September call...

Select the correct answer for each of the following questions. 1. In the registration and sales of new securities issues, the SEC a. Endorses a security's investment merit by allowing its...

A 113-mL gas sample has a mass of 0.171 g at a pressure of 721 mmHg and a temperature of 32 C . What is the molar mass of the gas?

Which option is a government - sponsored health care program that is financed through taxes and general revenue funds? a . Social Security b . Medicaid c . Medicare d . Insurance Exchange

Name: Page of HW: 5-3-11 Find the reactions at A and B. 450 Answer(s): A. 825Nm 4m 500N 6.5m

5- Find the force P so that the vertical reactions at A and B are the same. Then find the reactions at A and B. 350 1225t Answer(s): B. | 36h 48in 78in

Name: Page of HW: 5-3-3 Find the reactions at A and B. 875Nm Answer(s): 450Nim 4m 500N 6.5m

Name: Page of HW: 5-3-1 Find the reactions at A and B. 875Nim Answer(s): 450Nim 4m 500N 6.5m

Apple Valley Orchards, Inc. (AVO), developed standard costs for direct material and direct labor. In 2011, AVO estimated the following standard costs for one of their most well-loved products, the...

Directions: Read "Glossophobia: The People's Fear" and answer the question. In paragraph ?, the author uses boldface and italics type to ) present a question for the reader to answer ) announce the...

1. Do you believe ABDs products are in a state of readiness to begin exporting to Europe? Why or why not? Are the products ready for exporting to emerging markets (e.g., China, Mexico, Russia)? Why...

What are the most important factors to consider when formulating international pricing strategies? What steps would you follow in arriving at international prices?

There are numerous foreign exchange calculators on the Internet, such as www.x-rates.com. You can find them via globalEDGE or by entering the keywords exchange rate into a Google search. Visit one of...

9. What is the relationship between orexin and narcolepsy?

2. What is the primary advantage of maintaining a constant body temperature?

4. What evidence do we have that the POA/AH controls body temperature?