On 19 April Following are the Spot Rates Spot EUR/USD 1.2000 USD/INR 44.8000 Following are the quotes for European Type Options Currency Pair Call/Put Strike Price Premium Expiry Date EUR/USD Call 1.2000 $0.035 July 19 EUR/USD Put 1.2000 $0.04 July 19 USD/INR Call 44.8000 Rs.0.12 Sep 19 USD/INR Put 44.8000 Rs.0.04 Sep 19 A Dealer believes that the spot rate for the Dollar will rise to INR 45.00 by September 19. So he decides to buy at the money call options. If his expectations are correct, his profit from BUYING call options FOR USD1.5 Million will be INR______. a. 110,000 b. 100,000 c. 120,000 d. 80,000
On 19 April Following are the Spot Rates Spot EUR/USD 1.2000 USD/INR 44.8000 Following are the quotes for European Type Options Currency Pair Call/Put Strike Price Premium Expiry Date EUR/USD Call 1.2000 $0.035 July 19 EUR/USD Put 1.2000 $0.04 July 19 USD/INR Call 44.8000 Rs.0.12 Sep 19 USD/INR Put 44.8000 Rs.0.04 Sep 19 A Dealer believes that the spot rate for the Dollar will rise to INR 45.00 by September 19. So he decides to buy at the money call options. If his expectations are correct, his profit from BUYING call options FOR USD1.5 Million will be INR______. a. 110,000 b. 100,000 c. 120,000 d. 80,000
Chapter5: Currency Derivatives
Section: Chapter Questions
Problem 28QA
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Study this Case and Answer Question Asked Below:
On 19 April Following are the Spot Rates
Spot EUR/USD 1.2000 USD/INR 44.8000
Following are the quotes for European Type Options
Currency Pair |
Call/Put |
Strike Price |
Premium |
Expiry Date |
EUR/USD |
Call |
1.2000 |
$0.035 |
July 19 |
EUR/USD |
Put |
1.2000 |
$0.04 |
July 19 |
USD/INR |
Call |
44.8000 |
Rs.0.12 |
Sep 19 |
USD/INR |
Put |
44.8000 |
Rs.0.04 |
Sep 19 |
A Dealer believes that the spot rate for the Dollar will rise to INR 45.00 by September 19. So he decides to buy at the money call options. If his expectations are correct, his profit from BUYING call options FOR USD1.5 Million will be INR______.
a.
110,000
b.
100,000
c.
120,000
d.
80,000
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