You hedged your financial firms exposure to declining interest rates by buying one September call on Treasury
Question:
a. How much did you pay for the call in dollars if you chose the strike price of 11000? (Remember that option premiums are quoted in 64ths.)
b. Using the following information for trades taking place on June 10. If you sold the call on June 10, due to a change in circumstances, would you have reaped a profit or loss? Determine the amount of the profit or loss.
Strike Price
In finance, the strike price of an option is the fixed price at which the owner of the option can buy, or sell, the underlying security or commodity.
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Related Book For
Bank Management and Financial Services
ISBN: 978-0078034671
9th edition
Authors: Peter Rose, Sylvia Hudgins
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