Assume that a speculator purchases a put option on British pounds (with a strike price...
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Assume that a speculator purchases a put option on British pounds (with a strike price of $1.50) for $.05 per unit. A pound option represents 31,250 units. Assume that at the time of the purchase, the spot rate of the pound is $1.51 and continually rises to $1.58 by the expiration date. The highest net profit possible for the speculator based on the information above is:
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| $1,562.50. | |
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| $1,562.50. | |
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| $937.50 | |
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| $625.00. |
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