You have bought 6-month put options on the Mexican Peso with a strike price of 0.0490 $/peso at a price of 0.014 cents per peso for 30,000,000 pesos (careful of the decimal points!). Your cost of capital is an annual 9% rate. If the value of the peso declines to 0.0471 in 6 months, what is the total future value (including the cost) of your option position?

Answer rating: 100% (QA)

To calculate the future value of the option position we need to determine the profit or loss on the ... View the full answer