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XYZ Co. has purchased 100,000 Canadian dollar put options for specula­tive purposes. Each option was purchased for a premium of $.03 per unit, with an exercise price of $.90 per unit. XYZ Co. will exercise the options (if it is feasible to exercise the options). It plans to wait until the expiration date before deciding whether to exercise the options. Compute the net profit (or loss) to XYZ Co. based on the listed possible spot rates of the Canadian dollar from $0.80 to $1.00 (with an interval of $0.01) per unit on the expiration date.

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M91772049

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