A speculator is considering the purchase of one three-month put option on USD with a strike...

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A speculator is considering the purchase of one three-month putoption on USD with a strike price of 97 yen per U.S. dollar. Thepremium is 0.24 yen per U.S. dollar. The current spot price is107.81 yen per U.S. dollar and the 90-day forward rate is 71.46yen/USD. The speculator believes the USD will depreciate to $1.00versus 93 yen over the next three months. As the speculator’sassistant, you have been asked to prepare the followings: 1. Graphthe profit/loss diagram of the put option in an Excel spreadsheet.2. Determine the speculator’s profit if the USD depreciates to 93yen/USD. 3. Determine the speculator’s profit/loss if the USDdepreciates to the forward rate. 4. Determine the future spot priceat which the speculator will only break even.

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K 97 P 024 F 7146 Fexp 93Profit Loss from Put option max K S 0 P max 97 S 0 024Part 1The profitloss See Answer

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A speculator is considering the purchase of one three-month putoption on USD with a strike price of 97 yen per U.S. dollar. Thepremium is 0.24 yen per U.S. dollar. The current spot price is107.81 yen per U.S. dollar and the 90-day forward rate is 71.46yen/USD. The speculator believes the USD will depreciate to $1.00versus 93 yen over the next three months. As the speculator’sassistant, you have been asked to prepare the followings: 1. Graphthe profit/loss diagram of the put option in an Excel spreadsheet.2. Determine the speculator’s profit if the USD depreciates to 93yen/USD. 3. Determine the speculator’s profit/loss if the USDdepreciates to the forward rate. 4. Determine the future spot priceat which the speculator will only break even.