Yize Shen at Sumatra Funds. Yize Chen trades currencies for Sumatra Funds in Jakarta. She focuses nearly all of her time and attention on the U.S. dollar (USD) to Singapore dollar (SGD) cross-rate. The current spot rate is USD0.6000 = SGD1.00. After considerable study, she has concluded that the Singapore dollar will appreciate versus the U.S. dollar in the coming 90 days, probably to about USD0.7004 = SGD1.00. She has the following options on the Singapore dollar to choose from: a. Should Yize buy a put on Singapore dollars or a call on Singapore dollars? b. What is Yize's break-even price on the option purchased in part (a)? c. Using your answer from part (a), what is Yize's gross profit and net profit (including premium) if the spot rate at the end of 90 days is indeed USD0.7004? d. Using your answer from part (a), what is Yize's gross profit and net profit (including premium) if the spot rate at the end of 90 days is USD0.8008? a. Should Yize buy a put on Singapore dollars or a call on Singapore dollars? (Select the best choice below.) A. Since Yize expects the Singapore dollar to appreciate versus the U.S. dollar, she should buy a call on Singapore dollars. This gives her the right to sell Singapore dollars at a future date at USD0.6500/SGD each, and then immediately rebuy them in the open market at USD0.7004/SGD each for a profit. (If her expectation of the future spot rate proves correct.) OB. Since Yize expects the Singapore dollar to appreciate versus the U.S. dollar, she should buy a put on Singapore dollars. This gives her the right to buy Singapore dollars at a future date at USD0.6500/SGD each, and then immediately resell them in the open market at USD0.7004/SGD each for a profit. (If her expectation of the future spot rate proves correct.) C. Since Yize expects the Singapore dollar to appreciate versus the U.S. dollar, she should buy a call on Singapore dollars. This gives her the right to buy Singapore dollars at a future date at USD0.7004/SGD each, and then immediately resell them in the open market at USD0.6500/SGD each for a profit. (If her expectation of the future spot rate proves correct.) D. Since Yize expects the Singapore dollar to appreciate versus the U.S. dollar, she should buy a call on Singapore dollars. This gives her the right to buy Singapore dollars at a future date at USD0.6500/SGD each, and then immediately resell them in the open market at USD0.7004/SGD each for a profit. (If her expectation of the future spot rate proves correct.) b. What is Yize's break-even price on the option purchased in part (a)? Yize's breakeven price is USD/SGD. (Round to five decimal places.) c. Using your answer from part (a), what is Yize's gross profit and net profit (including premium) if the spot rate at the end of 90 days is indeed USD0.7004? Yize's gross profit, if the spot rate at the end of 90 days is USD0.7004/SGD, is USD/SGD. (Round to five decimal places.) Yize's net profit (including premium), if the spot rate at the end of 90 days is USD0.7004/SGD, is USD/SGD. (Round to five decimal places.) d. Using your answer from part (a), what is Yize's gross profit and net profit (including premium) if the spot rate at the end of 90 days is USD0.8008? Yize's gross profit, if the spot rate at the end of 90 days is USD0.8008/SGD, is USD/SGD. (Round to five decimal places.) Yize's net profit (including premium), if the spot rate at the end of 90 days is USD0.8008/SGD, is USD /SGD. (Round to five decimal places.) Data table Premium (Click on the following icon in order to copy its contents into a spreadsheet.) Option Put on SGD Call on SGD Strike Price USD0.6500 SGD1.00 USD0.6500 SGD1.00 USD0.00003 per SGD USD0.00046 per SGD Print Done