5. XYZ plc has been offered the following quotes for options on the dollar given a...

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Finance

5.   XYZ plc has been offered the following quotes foroptions on the dollar given a   current market price of60 pence:     Strike price of dollar in pence  Call premium   Put premium    1 year   1 year   62  6.9   3.0   64   5.9  3.8   66   4.8   4.5  67   4.5   5.1
a.   Calculate the net payout from a purchased calloption at a strike price of   67 pence for the followingpossible maturity prices 55p, 60p,65p,70p,75p.
  b.   Calculate the net payout for awritten put option at 66p for the following possible  maturity prices: 55p, 60p,65p,70p,75p.
(6   marks)
   a.   Calculate the total cost of thedollar if the MNC were to implement part a and part   bof this question for the following maturity prices: 55p,60p,65p,70p,75p .             b.   Outline the advantages anddisadvantages of purchasing a call at 67p and   writing aput at 66p for a MNC importing from the US.

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4.4 Ratings (847 Votes)

aPayoff Long BuyCall Option Strike Price X Price at expiration S Pay off MaxSX0 S X AMaxSX0 B CBA Price at Expirationpence Strike PricePence Payoff Long CallPence Premiumpence Net Payoutp 55 67 See Answer

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