A) Explain in detail the currency crisis in Pakistan since its inception elucidate the reasons with...
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A) Explain in detail the currency crisis in Pakistan since its inception elucidate the reasons with arguments pertaining to the depreciation of Pakistani rupee (PKR) over years. How has the current prevalent pandemic COVID-19 affected PKR. What are the main differences in policy and strategy of response to such economic meltdown of Bangladesh, Pakistan, UK and USA? (15 marks) B) Mr. Ali has bought a Call option whereby volume of the currency to be exchanged is USD100,000 executeable in one week and the exercise price is PKR 165/USD1. As, he has imported some goods and is about to pay to USA exporter. Current prevalent spot rate is PKR153/1USD. Mr Ali has paid a call premium of USD50. After one week: Case 1: The exchange rate of PKR has appreciated by 10% Case 2: The exchange rate of PKR has depreciated by 8% 1. In which case will Mr. Ali exercise the option? 2. Calculate profit/loss for buyer and seller of contract in both cases. A) Explain in detail the currency crisis in Pakistan since its inception elucidate the reasons with arguments pertaining to the depreciation of Pakistani rupee (PKR) over years. How has the current prevalent pandemic COVID-19 affected PKR. What are the main differences in policy and strategy of response to such economic meltdown of Bangladesh, Pakistan, UK and USA? (15 marks) B) Mr. Ali has bought a Call option whereby volume of the currency to be exchanged is USD100,000 executeable in one week and the exercise price is PKR 165/USD1. As, he has imported some goods and is about to pay to USA exporter. Current prevalent spot rate is PKR153/1USD. Mr Ali has paid a call premium of USD50. After one week: Case 1: The exchange rate of PKR has appreciated by 10% Case 2: The exchange rate of PKR has depreciated by 8% 1. In which case will Mr. Ali exercise the option? 2. Calculate profit/loss for buyer and seller of contract in both cases.
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