Purchase Solution

Currency put options

Not what you're looking for?

Ask Custom Question

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?

Purchase this Solution
Solution Summary

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

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 ...

Purchase this Solution
Free BrainMass Quizzes
SWOT

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

View More Free Quizzes
Related BrainMass Solutions

  • Under what circumstances would you recommend options as a risk reducing strategy?

    Under what circumstances would you recommend options as a risk reducing strategy Option is a privilege sold by one party to another that offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security at an agreed-upon

  • U.S. Exchange Rates Compared to British Interest Rates

    Put Options.

  • selling a put option.

    FROM: Financial Manager, DATE: 2nd January, 2012 SUBJECT: Call and put options.

  • currency risk and borrowed funds

    Call options give the buyer the right to sell a currency, while put options give the buyer the right to sell the currency. Thus Mr.

  • Hedging with Currency Derivatives

    If the pound has depreciated over this three-month period, put options with the same exercise price would command higher premiums. Therefore, the team may wish to purchase put options immediately.

  • Forex market and hedging

    The best way for a multinational to hedge against foreign currency risk is to use hedging mechanisms available in the international markets, such as currency forwards, currency futures, put and call options, interest rate swaps,etc.

  • International Financial Management

    The best way for a multinational to hedge against foreign currency risk is to use hedging mechanisms available in the international markets, such as currency forwards, currency futures, put and call options, interest rate swaps,etc.

  • Use of Financial Derivatives

    Futures, Interest and currency swap, Options, Forward, warrants. c.

  • Futures and Options Markets

    Discuss how foreign currency options can be used so that Importco is guaranteed that its exchange rate will be less than 1.8800. To do this, answer the following: will Importco use a put or a call? Will it be long or short the option?

View More Related Solutions