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Currency put options

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Alice bought a put option on British pounds for $.04 per unit. The strike price was $1.80, and the spot rate at the time the pound option was exercised was $1.59. Assume that there are 31,250 units in a British pound option. What was Alice's net profit on the option?

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Solution Preview

Alice Duever purchased a put option on British pounds for $.04 per unit. The strike price was $1.80 and the spot rate at the ...

Solution Summary

Currency put options are examined for Alice's net profit.

$2.19