Suppose you hold a CALL option on Animal Crossing bells with a strike price of 86.070bells/$....
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Suppose you hold a CALL option on Animal Crossing bells with a strike price of 86.070bells/$. If the spot rate on the final day of the option is 85.201bells/$, how much profit would you make exercising the option to buy one thousand dollars' worth of AC bells using the call and selling them on the spot market? Answer to the nearest penny. [Hint: walk through the steps. You start with $1000. You turn them into bells using one exchange rate. You turn the bells back into dollars using the other exchange rate Then subtract the original $1000 to get your profit.] Suppose you hold a CALL option on Animal Crossing bells with a strike price of 86.070bells/$. If the spot rate on the final day of the option is 85.201bells/$, how much profit would you make exercising the option to buy one thousand dollars' worth of AC bells using the call and selling them on the spot market? Answer to the nearest penny. [Hint: walk through the steps. You start with $1000. You turn them into bells using one exchange rate. You turn the bells back into dollars using the other exchange rate Then subtract the original $1000 to get your profit.]
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