Question
Q4) 20. Speculating with Currency Put Options. Auburn Co. has purchased Canadian dollar PUT options for speculative purposes. Each option was purchased for a premium
Q4) 20. Speculating with Currency Put Options. Auburn Co. has purchased Canadian dollar PUT options for speculative purposes. Each option was purchased for a premium of $.02 per unit, with an exercise price of $.86 per unit. Auburn Co. will purchase the Canadian dollars just before it exercises the options (if it is feasible to exercise the options). If the spot rate for Canadian dollar at the expiration date is 0.76, what is the net profit (or loss) to Auburn Co. (remember to include the premium paid in your calculation)? In your answer, do not put the dollar sign ($)
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