Question: Set up and solve please You take a short position on a put option on 62,500. The strike price is X(/)=0.8657 and the current spot

Set up and solve please You take a short position on

Set up and solve please

You take a short position on a put option on 62,500. The strike price is X(/)=0.8657 and the current spot rate is So(/)=0.8644. In t=1 the exchange rate will be either Sup(/)=0.8698 or Spown(/)=0.8107. The interest rate is ip=0.1321% in the U.K and le=0.5749% in the euro zone. What are the maximum loss, maximum gain, and break- even point for this option

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