1 john sold a call option on euro for 04 per unit the

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1. John sold a call option on Euro for $.04 per unit. The strike price was $1.30, and the spot rate at the time the option was exercised was $1.32. Assume John bought the Euro from the market if the option was exercised. Also assume that there are 100,000 units in a Euro option. What was John s net profit on the call option? Baylor Bank believes the New Zealand dollar will appreciate over the next 20 days from $.50 to $.53. The following annual interest rates apply: Currency Lending Rate Borrowing Rate Dollars 4.00%
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5.90% New Zealand dollar (NZ$) 5.50% 7.10% 2. Baylor Bank has the capacity to borrow either NZ$10 million or USD 5 million. If Baylor Bank's forecast is correct, what will its dollar profit be from speculation over the 20 days period (assuming it does not use any of its existing consumer deposits to capitalize on its expectations)? 3. Compute the bid/ask percentage spread for Mexican peso retail transactions in which the ask rate is $.0811 and the bid rate is $.0797. 4. You observe following exchange rate quotations: $1 is equal
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to CNY 6.7021 Chinese yuan JPY1 Japanese yen equal to 0.0585 Chinese yuan. How many Japanese yen will you need to purchase 1 million US dollar? 5. One year ago, you bought a put option on 500,000 euros with an expiration date of one year. You paid a premium on the put option of $.03 per unit. The exercise price was $1.30. Assume that one year ago, the spot rate of the euro was $1.29, the one-year forward rate exhibited a discount of 3%, and the one-year futures price was the same as the one-year forward rate. From one year ago to today, the euro depreciated against the dollar by 2 percent. Today the put option will be exercised (if it is feasible for the buyer to do so) a. Determine the total dollar amount of your profit or loss from your position in the put option. b.Now assume that instead of taking a position in the put option one year ago, you sold a futures contract on 500,000 euros with a settlement date of one year. Determine the total dollar amount of your profit or loss. 6. The one-year forward rate of the British pound is quoted at $1.5316, and the spot rate of the British pound is quoted at $1.5426. The forward is present premium (or discount) at what annual percent rate?
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  • Fall '19
  • United States dollar, ISO 4217

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