1. Some consulting work for a communications firm in Thailand. You will be paid B468,187 (Thai Baht) seven months from now when the work is done. To hedge against an unfavorable exchange rate when you get paid, you decide to purchase a put option with a striking price of B31.33/$. The premium rate is 0.001 US cents per Thai Baht. Seven months from now, the exchange rate is B33.31/$. How much better off (in terms of US Dollars) are you AT THE MARGIN if you exercise the option versus if you were to exchange your paycheck on the spot market on the day you get paid? Enter a negative number if you're worse off. 
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3. Would you have been better off having never purchased the option? Why or why not?

Answer rating: 100% (QA)

1 Calculating Payoff from Exercising the Put Option Striking price of the put option B3133 Premium r... View the full answer