Question: Hi there, can you help me with below question? You believe the US dollar will increase relative to the Australian dollar (A$) and decrease relative
Hi there, can you help me with below question?
You believe the US dollar will increase relative to the Australian dollar (A$) and decrease relative to the Hong Kong dollar (HK$) over the next 6 months. You decide to create a portfolio consisting of 10 six month Australian dollar call contracts and 10 six month Hong Kong dollar put contracts. The call contracts have 10,000 Australian dollars attached and have a strike price and premium of $1.05 and $.02, respectively. The put contracts have 50,000 Hong Kong dollars attached and have a strike price and premium of $.12 and $.01, respectively.
Find the value of your portfolio (in USD) if the spot rates at expiration are as follows: $1.08/A$, $.14/HK$
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