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31 May 2019
8. a) Consider a PUT option on euros with a strike price of $1.05/⬠and an option premium of 8 cents per euro. Calculate the profit (net of the cost of the option) to the holder of the option for the following different possible spot rates at option maturity: $0.90/â¬, $0.95/â¬, $1.00/â¬, $1.05/â¬, $1.10/â¬, $1.15/â¬, $1.20/â¬. What is the break-even spot rate (the spot rate at which the profit is exactly zero)? (10 points)
b) List any two important differences between a call option and a put option. (10 points)
8. a) Consider a PUT option on euros with a strike price of $1.05/⬠and an option premium of 8 cents per euro. Calculate the profit (net of the cost of the option) to the holder of the option for the following different possible spot rates at option maturity: $0.90/â¬, $0.95/â¬, $1.00/â¬, $1.05/â¬, $1.10/â¬, $1.15/â¬, $1.20/â¬. What is the break-even spot rate (the spot rate at which the profit is exactly zero)? (10 points)
b) List any two important differences between a call option and a put option. (10 points)
Hubert KochLv2
3 Jun 2019
