Problemassume that a british pound put option has a premium, Ask an Expert

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Problem:

Assume that a British pound put option has a premium of $0.03 per unit, and an exercise price of $1.60. The present spot rate is $1.61. The expected future spot rate on the expiration date is $1.52. The option will be exercised on this date if at all.

Required:

Question: What is the expected per unit net gain (or loss) resulting from purchasing the put option?

A. $.01 loss

B. $.09 loss

C. $.09 gain

D. $.05 gain

Note: Be sure to show how you arrived at your answer.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91166953

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