Question Details

What do you think happened to the futures price 



1.	Selling Currency Put Options. Brian Tull sold a put option on Canadian dollars for $.03 per unit. The strike price was $.75, and the spot rate at the time the option was exercised was $.72. Assume Brian immediately sold off the Canadian dollars received when the option was exercised. Also assume that there are 50,000 units in a Canadian dollar option. What was Brian- net profit on the put option?
2.	Price Movements of Currency Futures. Assume that on November 1, the spot rate of the British pound was $1.58 and the price on a December futures contract was $1.59. Assume that the pound depreciated during November so that by November 30 it was worth $1.51.

	a.	What do you think happened to the futures price over the month of November? Why?
b.	If you had known that this would occur, would you have purchased or sold a December futures contract in pounds on November 1? Explain.




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