1. ABC Mining Inc. bought an option for P1,225. The option allows ABC to sell 10 tons of copper at a price of P30,200 per ton one month from now. If on the exercise date, a ton of copper sells for P29,600, how much is the net benefit obtained by ABC from the contract? 

 

2. On January 1, 2022, ABC Corporation entered into a 60-day put option contract for $30,000. Based on the PHP-USD rates below, what is the intrinsic value of the contract on Mar. 2, 2022?

January 1, 2022	Buying Rate	Selling Rate
Spot Rate	55.10	55.67
30-day Forward Rate	55.41	55.43
60-day Forward Rate	55.93	55.96
January 30, 2022	Buying Rate	Selling Rate
Spot Rate	55.38	55.75
30-day Forward Rate	55.71	56.17
60-day Forward Rate	56.04	56.61
Mar. 2, 2022	Buying Rate	Selling Rate
Spot Rate	55.88	55.73
30-day Forward Rate	55.93	55.79
60-day Forward Rate	55.95	55.82

Answer rating: 100% (QA)

1 To calculate the net benefit obtained by ABC Mining Inc from the contract we need to determine t... View the full answer