Company D has sold a put option of 100,000 euros for speculative purposes. Assume that Company...
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Company D has sold a put option of 100,000 euros for speculative purposes. Assume that Company D will sell the euros received at the spot exchange rate immediately after the option was exercised. Each option was sold for a premium of $0.04 per unit, with an exercise price of $1.22. Assume that the option can only be exercised on the expiration date. a) If the spot exchange rate of the euro on the expiration date is $1.30, calculate the total dollar amount of Company D's net profit. b) If the spot exchange rate of the euro on the expiration date is $1.21, calculate the total dollar amount of Company D's net profit. c) If the spot exchange rate of the euro on the expiration date is $1.15, calculate the total dollar amount of Company D's net profit. d) Find the break-even point. Company D has sold a put option of 100,000 euros for speculative purposes. Assume that Company D will sell the euros received at the spot exchange rate immediately after the option was exercised. Each option was sold for a premium of $0.04 per unit, with an exercise price of $1.22. Assume that the option can only be exercised on the expiration date. a) If the spot exchange rate of the euro on the expiration date is $1.30, calculate the total dollar amount of Company D's net profit. b) If the spot exchange rate of the euro on the expiration date is $1.21, calculate the total dollar amount of Company D's net profit. c) If the spot exchange rate of the euro on the expiration date is $1.15, calculate the total dollar amount of Company D's net profit. d) Find the break-even point.
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