Please Use data below to answer the next foru questions Option contract is for c

Question

Please Use data below to answer the next foru questions Option contract is for canadian Kollars (CD): Each contract is for CD 50,000. All quotes are in cents per unit. The number 72 for example under Exercise price is also in cents per unit or it is $0.72. 32) For the buyer of one 76.5 september put, what is the profit or loss at exlpiration if spot is at $0.72 a) $250 b) -$2440 c)-$2250 d)- $190 33) What is the break even point for the 76.5 september put option expressed on a per unit basis a) $0.7162 b) $0.8138 c) $0.7665 d) $0.7344 34) If the spot price of CD is $0.7225, which of the following options is in money a) 72.5 July call b) 73 July call c) 73 september put d) 72 deptember put 35) Cost of buying one CD put option contract with an exercise price of $0.73 expiring in septemberis a)$1.75 b) $28 c) $730 d) $8750 e) $875 36)USA's GNP increases, while that of mexico does not change. The end result is that the price of mexican peso will: a) increase; b) decrease; 37) During a given time period, The Euro went from $1.25/Euro to $1.50/Euro. Both the USA and Euro central banks agreed to reverse this trend. Their combined action will mean that the for Euro will. a) supply;increase; b) demand;increase; c) supply;decrease; d) demand;decrease; 38) If the chinese government increased the tariff on items exported by USA to china,then the of FX will a) demand;increase; b) supply;decrease; c) supply;increase; d) demand;decrease; 39) Increasing desire by foreigners for USA made products will lead to an increase in of FX in the foreign exchange market a) Demand b) supply

Explanation / Answer

32) loss of $190

Strike price=$ .765

Spot price =$ .72

Gross payoff=$ .045

Less:put option premium=$.0488

Net payoff =$0.0038

Loss =$ 190(.0038*50000)

Here put option means right to sell

33) let x be the spot price at which net payoff is zero

Then net payoff =strike price -spot price-option premium

=$.765-$.0488-×=0

X=$.7162

34) $73 September put is in the money as strike price is more than the current market price

35) cost of buying one CD put option is $875

Put option premium for $73 September put =0.0175

Cost for buying it=$ 875(.0175*50000)

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