Using the quotations below show the rates of return for 3 possibilites for one year.

2. (25 points) Foreign Currency Speculation in General You are a currency speculator in NY. You are willing to risk money on your own opinion about future currency prices. Your position on S2 after one year, S2= $0.6175/SF You may speculate in the (1) spot, (2) forward, and (3) option markets (buyer's position). Using the quotations below, show the rates of return (p.a.) for three possibilities of speculation for one year. You have $1,000,000 with which to speculate. Spot rate: 12 month forward rate: $0.5855/SF $0.5755/SF 12 month's option; Call, Strike price $0.5850/SF, Premium $0.006/SF Put, Strike price $0.5850/SF, Premium $0.007/SF 2. (25 points) Foreign Currency Speculation in General You are a currency speculator in NY. You are willing to risk money on your own opinion about future currency prices. Your position on S2 after one year, S2= $0.6175/SF You may speculate in the (1) spot, (2) forward, and (3) option markets (buyer's position). Using the quotations below, show the rates of return (p.a.) for three possibilities of speculation for one year. You have $1,000,000 with which to speculate. Spot rate: 12 month forward rate: $0.5855/SF $0.5755/SF 12 month's option; Call, Strike price $0.5850/SF, Premium $0.006/SF Put, Strike price $0.5850/SF, Premium $0.007/SF