Question Details

Bama will purchase the pounds on the day the options are exercised 



1. Speculating with Currency Call Options. Randy Rudecki purchased a call option on British
pounds for $.02 per unit. The strike price was $1.45 and the spot rate at the time the option was
exercised was $1.46. Assume there are 31,250 units in a British pound option. What was Randy-
net profit on this option?

2. Speculating with Currency Call Options. Bama Corp. has sold British pound call options for
speculative purposes. The option premium was $.06 per unit, and the exercise price was $1.58.
Bama will purchase the pounds on the day the options are exercised (if the options are exercised)
in order to fulfill its obligation. In the following table, fill in the net profit (or loss) to Bama Corp.
if the listed spot rate exists at the time the purchaser of the call options considers exercising them.



Business Management Assignment Help, Business Management Homework help, Business Management Study Help, Business Management Course Help