Question

If we long a European put option on Euro. The strike price is $1.7362/€. The option...

If we long a European put option on Euro. The strike price is $1.7362/€. The option premium is $0.0559/€. What is future spot rate that makes the option “at-the-money”?

A.

$1.7362/€
B.

$0.0559/€
C.

$1.6803/€
D.

$1.7921/€
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

ANSWER DOWN BELOW. FEEL FREE TO ASK ANY DOUBTS. THUMBS UP PLEASE.

Put option:
When share prices below the strike price then put option is in the money, otherwise, it is out of money.

It is at the money when the share price is equal to the strike price.

For put option as strike price increases, the value of premium must increase.

Here the strike price is $1.7362/€

The option is said to be at the money when it's the forward price is $1.7362/€

The answer is: A. $1.7362/€

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
spot rate now is $1.1201/€, and home currency usd Put on option Euro (€). strike price...
spot rate now is $1.1201/€, and home currency usd Put on option Euro (€). strike price of $1.0640/€ and a premium of $0.00038/€. a)find break-even price for the option. b) any purchaser, when spot rate is $1.1740/€, is the option at-the-money, or in-the-money, or out-of-the-money? c) find net profit for the option if the spot rate is $1.0000/€.
For a European call option and a European put option on the same stock, with the...
For a European call option and a European put option on the same stock, with the same strike price and time to maturity, which of the following is true? A) Before expiration, only in-the-money options can have positive time premium. B) If you have a portfolio of protected put, you can replicate that portfolio by long a call and hold certain amount of risk-free bond. C) Since both the call and the put are risky assets, the risk-free interest rate...
For a European call option and a European put option on the same stock, with the...
For a European call option and a European put option on the same stock, with the same strike price and time to maturity, which of the following is true? A) When the call option is in-the-money and the put option is out-of-the-money, the stock price must be lower than the strike price. B) The buyer of the call option receives the same premium as the writer of the put option. C) Since both the call and the put are risky...
The price of a European put option on a stock with a strike price of $30.00...
The price of a European put option on a stock with a strike price of $30.00 is $6.80. The stock price is $28.00, the continuously compounded risk-free rate (all maturities) is 4% and the time to maturity is one year. A dividend of $2.00 is expected in three months. What is the price of a one-year European call option on the stock with a strike price of $30.00?   Select one: a. $7.22 b. $4.00 c. $6.98 d. $4.74
1. John sold a put option on Euro for $.04 per unit. The strike price was...
1. John sold a put option on Euro for $.04 per unit. The strike price was $1.30, and the spot rate at the time the option was exercised was $1.27. Assume John immediately sold off the Euro received when the option was exercised. Also assume that there are 200,000 units in a Euro option. What was John’s net profit on the put option?
Consider a European call option and a European put option, both of which have a strike...
Consider a European call option and a European put option, both of which have a strike price of $70, and expire in 4 years. The current price of the stock is $60. If the call option currently sells for $0.15 more than the put option, the continuously compounded interest rate is a. 2.9%          b. 3.9% c. 4.9% d. 5.9%        
Consider an American put option and European put option with strike price x=60 dollars expiring at...
Consider an American put option and European put option with strike price x=60 dollars expiring at time 3 on a stock with initial price s(0)=60 dollars in a binomial model with u=0.2, d=-0.08, r=0.04. a) Find the European put price b) Find the American put price c) compare your observations
For a European option, if the stock price on the expiration day is higher than the...
For a European option, if the stock price on the expiration day is higher than the strike price, we call it A. “in the money” if it is a put option B. “at the money” if it is a call option C. “at the money” if it is a put option D. “out of the money” if it is a put option E. “out of the money” if it is a call option
Consider a three-month European call option issued on €62,500 with a strike price of $1.35 =...
Consider a three-month European call option issued on €62,500 with a strike price of $1.35 = €1.00 and an option premium of $3,750. What is the break even Spot Exchange Rate in three month ? (Assume interest rate is 0) A. $1.60/€ B. $1.55/€ C. $1.41/€ D. none of the above
a. A speculator purchased a call option on Japanese Yen at a strike price of $0.70...
a. A speculator purchased a call option on Japanese Yen at a strike price of $0.70 and for a       premium of $.06 per unit. At the time the option was exercised if the Japanese Yen spot       rate was $.75 a) Find the speculator’s net profit per unit? b) If each contract is made up of 62500 units what is the net profit per contract? c) At which spot price will the speculator break even? d) What is the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT