XYZ plc has been offered the following quotes for options on the dollar given a current market price of 60 pence:

a. Calculate the net payout from a purchased call option at a strike price of 67 pence for the following possible maturity prices 55p, 60p,65p,70p,75p. (6 marks) b. Calculate the net payout for a written put option at 66p for the following possible maturity prices: 55p, 60p,65p,70p,75p. (6 marks) a. Calculate the total cost of the dollar if the MNC (Multinational Corporation) were to implement part a and part b of this question for the following maturity prices: 55p, 60p,65p,70p,75p . (6 marks) b. Outline the advantages and disadvantages of purchasing a call at 67p and writing a put at 66p for a MNC importing from the US.

Call premium 1 year 6.9 5.9 4.8 4.5 Put premium 1 year 3.0 3.8 4.5 5.1 Strike price of dollar in pence 62 64 67