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Lunar Tech is an American company who is bidding to build a nuclear plant in Australia. If they win the bid, they will need 3,000,000
Lunar Tech is an American company who is bidding to build a nuclear plant in Australia. If they win the bid, they will need 3,000,000 AUS$ initially to start construction. The Australian government has stated that they will announce who got the winning bid in 90 days. The following are contract characteristics of various options: A: Put option with a strike price of $0.71 and a premium of $.01 and an expiration date of 120 days. B: Call option with a strike price of $0.72 and a premium of $.03 and an expiration date of 60 days. C: Call option with a strike price of $0.72 and a premium of $.04 and an expiration date of 90 days. D: Call option with a strike price of $0.71 and a premium of $.06 and an expiration date of 90 days. The current spot rate is $0.74, and you expect the spot rate in 90 days to be $0.79. A) Which option would you purchase? (only one correct answer) (8 points) B) Draw the contingency graph for the option you chose in part A. Be sure to fully label the graph
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