Exercise A speculator is considering the purchase of five three-month Japanese yen call options (JPY1,000,000...
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Exercise A speculator is considering the purchase of five three-month Japanese yen call options (JPY1,000,000 per contract) with a striking price of 96 cents per 100 yen. The premium is 1.35 cent price is 95.28 cents per 100 yen and the 90-day forward rate is 95.71 cents. The speculator believes the yen will appreciate to $1.00 per 100 yen over the next three months. As the speculator's assistant, you have been asked to prepare the following: 1. Graph the call option cash flow schedule 2. Determine the speculator's profit if the yen appreciates to $1.00/100 per 100 yen. The spot yen Determine the speculator's profit if the yen a forward rate,. Determine the future spot price at which the speculator will only break evern 3. ppreciates only to the 4
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