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This problem is worth 25 points. Create a contingency graph for the owner of a Mexican peso put option that has a strike price of
This problem is worth 25 points. Create a contingency graph for the owner of a Mexican peso put option that has a strike price of U.S.$0.0494 and a premium of U.S.$0.0071. Clearly label the axes, identify the break-even and strike prices on the graph, and shade/mark the profit and loss regions. Specify when 1) the option is at the money and 2) the option might be exercised. What is the profit per peso if the value of the peso drops to $.0403? This problem is worth 25 points. Create a contingency graph for the owner of a Mexican peso put option that has a strike price of U.S.$0.0494 and a premium of U.S.$0.0071. Clearly label the axes, identify the break-even and strike prices on the graph, and shade/mark the profit and loss regions. Specify when 1) the option is at the money and 2) the option might be exercised. What is the profit per peso if the value of the peso drops to $.0403
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