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You want you to buy 1.62 million British pounds (GBP) using call options and foreign exchange market. The following four figures provide the market information
You want you to buy 1.62 million British pounds (GBP) using call options and foreign exchange market. The following four figures provide the market information on the GBP options, which expires in 5-month. How much can you make a net profit or a net loss for GBP1.62 million if the spot rate is A$1.7792 at the maturity (i.e., after 5 months)? (enter the whole number without sign and symbol). A$0.06 Contingency graph for purchasers of British pound call options Exercise price = A$1.50 Premium = A$0.02 Contingency graph for purchasers of British pound put options Exercise price - A$1.50 Premium = A$0.03 A$0.06 A$0.04 A$0.02 +A$0.04 A$0.02 Future Spot Rate Net profit per unit Net profit per Unit Future spot rate AA+++ A$146 AS 48 A$1.50A$1.52A51.54 AS1 A6 A51 48 A515661 52 A8154 -A$0.02 A$0.02 -A80 04 A$0.04 -A$0.06 -A$0.06 +A$0.06 Contingency graph for sellers of British pound call options Exercise price - A$1.50 Premium - A$0.02 A$0.06 Contingency graph for sellers of British pound put options Exercise price A$1.50 Premium A$0.03 +A$0.04 +A$0.04 A$0.02 A$0.02 Net profit per unit Net profit per unit -A$0.02 AS1 A6 A51 48 A5150A515218154 Future spot rate A$0.02 A 16 A51A8A5150 A5152A5151 Future spot rate -A$0.04 A$0.04 -A$0.06 A$0.06
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