On 20 June, you bought two contracts of call option for euro with a strike price of $ 14000 at a premium of $ 0.07. The spot rate was $ 14500 per euro then. The option expires in six months time in July. One contract of options is for euro 125000. You are required to find -

Question 1: Premium payable by you:

a) $15,500

b) $17,500

c) $16,500

d) $17,000

Question 2:- Intrinsic value of the call option:

a) $1,000

b) $1,500

c) $500

d) Zero

Question 3:- Time value of the call option:

a) $0.06

b) $0.07

c) 30.05

d) $0.65

Question 4:- If on expiry, the spot price is $ 14500, and you exercise the option, what would be the gain/ Loss?

a) Gain of $12500

b) Gain of $ 7500

c) Loss of $ 8500

d) Loss of $5000

Question 5:- If on expiry, the spot price is $ 14500, and you do not exercise the option, what would be the gain/ loss?

a) Gain of $ 5500

b) Gain of $ 5500

c) Loss of $ 5000

d) Loss of $6000