Question: Problem 7.10 Arthur Doyle at Baker Street Arthur Doyle is a currency trader for Baker Street, a private investment hous investors who, with a minimum

Problem 7.10 Arthur Doyle at Baker Street Arthur
Problem 7.10 Arthur Doyle at Baker Street Arthur Doyle is a currency trader for Baker Street, a private investment hous investors who, with a minimum stake of $250,000 each, wish to speculate on excess of 25%. Although officed in London, all accounts and expectations ar Arthur is convinced that the British pound will slide significantly -- possi $1 4260/E. Arthur wishes to buy a put on pounds which will yield the 25%% re you recommend he purchase. Prove your choice is the preferable combination Strike Price Maturity $1.36/E 30 days $1.34/E 30 days $1.32/E 30 days $1.36/C 60 days $1 34/C 60 days $1 32/C 60 days Assumptions Values Current spot rate (US$/E) $1.4260 Expected endings spot rate in 30 to 60 days (USS/E) $1.3200 Potential investment principal per person ({) E250,000.00 Put options on pounds Put #1 Strike price (US$/E) $1.36 Maturity (days) 30 Premium (USS/E) 50.00081 Put options on pounds Put #4 Strike price (US$/E) $1.36 Maturity (days) 60 Premium (US$/E) $0.0033

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