Answer:
Total dollar amount received=$590,000
Option C is correct ($590,000)
Explanation:
Given Data:
Exercise Price=$0.61
Premium Price=$0.02
Spot Rate=$0.60
Expected spot rate in 30 days=$.56
30-day forward rate =$0.62
Required:
Total dollar amount received=?
Solution:
We have to account for premium:
Total dollar amount received=(Exercise Price-Premium Price)*SF1,000,000
Total dollar amount received=($0.61-$0.02)*SF1,000,000
Total dollar amount received=$590,000
Option C is correct ($590,000)
Answer:
C)$59000
Explanation:
We will use the 30 day forward rate to calculate the amount in dollars and also account for the premium and it is a put option we subtract the premium
Firstly subtract the premium and put uses the exercise price
$0.61-$0.02=$0.59
=SF1000000*($0.59)
=$590000
