Solve part (c) and (d) of this problem below: XYZ plc has beenoffered the following quotes for options on the dollar given acurrent market price of 60 pence:
Strike price of dollar in pence Call premium Put premium
                                          1 year          1 year
62Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 6.9Â Â Â Â Â Â Â Â Â Â Â Â Â Â 3.0
64Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 5.9Â Â Â Â Â Â Â Â Â Â Â Â Â Â 3.8
66Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 4.8Â Â Â Â Â Â Â Â Â Â Â Â Â Â 4.5
67Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 4.5Â Â Â Â Â Â Â Â Â Â Â Â Â Â 5.1
a. Calculate the net payout from a purchased call option at astrike price of 67 pence for the following possible maturity prices55p, 60p,65p,70p,75p.
b. Calculate the net payout for a written put option at 66p for thefollowing possible maturity prices: 55p, 60p, 65p, 70p, 75p.
c. Calculate the total cost of the dollar if the MNC were toimplement part a and part b of this question for the followingmaturity prices: 55p, 60p, 65p, 70p, 75p.
d. Outline the advantages and disadvantages of purchasing a call at67p and writing a put at 66p for a MNC importing from the US.
