Homework:Chapter 7 Homework

Question 5, Problem 7-9 (book/static)

Part 1 of 7

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Part 1

Henrik's Options. Assume Henrik buys a call option on euros with a strike price of

$1.2500/

at a premium of

3.80

per euro

($0.0380/)

and with an expiration date three months from now. The option is for

100,000.

Calculate Henrik's profit or loss should he exercise before maturity at a time when the euro is traded spot at strike prices beginning at

$1.10/,

rising to

$1.40/

in increments of

$0.05.