Alpha Geek

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    Polytechnic State University Sanluis
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Category > Accounting Posted 27 May 2017 My Price 4.00

What is the spot rate for the breakeven point (zero net profit) for this option?

 

Assume that the exercise price is $1.40/A??L and the put premium is $0.10/A??L. Answer the following questions. [Hint: Please answer the following questions in term of the holder (Purchaser) of a put option]

What are the future spot rates for Ac€A?in the moneyAc€?? and Ac€A?out of the moneyAc€???

 

What is the spot rate for the breakeven point (zero net profit) for this option?

 

Find the net profit (per unit of currency) for the buyer of this put option when the spot rates are $1.25/A??L, $1.35/A??L, $1.45/A??L, and $1.55/A??L.

Spot Rate

 Net Profit (Loss) per unit if Spot Rate Occurs
$1.25/A??L  
$1.35/A??L  
$1.45/A??L  
$1.55/A??L  

 

What would be the maximum possible loss for a buyer of this put option (per unit) and explain why?

 
 

Answers

Alpha Geek
(8)
Status NEW Posted 27 May 2017 05:05 PM My Price 4.00

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Attachments

file 1495906018-Answer.docx preview (132 words )
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