How much of profit will immediate exercise generate

Assignment Help Financial Management

Reference no: EM131983965

1. The current spot exchange rate is $1.55 = €1.00 The three-month forward rate is $1.60 = €1.00 The three-month U.S interest rate is 4.835% the three-month European interest rate is 4.983% You are looking at a three-month American call option on €62,500 with a strike price of $1.50 = €1.00 costing $.0369/€. How much of a profit will immediate exercise generate?

2. Yesterday, you entered into a futures contract to buy €62,500 at $1.50/€. Your initial margin was $3,750 (= 0.04 × €62,500 × $1.50/€ = 4 percent of the contract value in dollars). Your maintenance margin is $2,000 (meaning that your broker leaves you alone until your account balance falls to $2,000). At what settle price (use 4 decimal places) do you get a margin call?

Reference no: EM131983965

Questions Cloud

How is information security regulated on the internet : How is information security regulated on the Internet? The Federal Government sets standards all Internet companies must follow

How you as individual can reduce your impact on environment : Environmental Science and Human Population Worksheet- How you as an individual can reduce your impact on the environment as it relates to this item or activity.

Procedure for establishing e-discovery guidelines : Policy and procedure for establishing e-discovery guidelines for the organization in compliance with the Electronic Discovery Reference Model (EDRM)

Calculate the companys cash outlays : The Sepulcro Corporation's purchases from suppliers in a quarter are equal to 70 percent of the next quarter's forecast sales. The payables period is 60 days.

How much of profit will immediate exercise generate : merican call option on €62,500 with a strike price of $1.50 = €1.00 costing $.0369/€. How much of a profit will immediate exercise generate?

Agency interpretation of its own rule : Assess deference and the discretion that is afforded in an agency's interpretation of its own rule, such as outlined in the Chevron decision.

How much money will you have accumulated in the fund : How much money will you have accumulated in the fund after 18 years, if your fund earns 10% compounded annually?

Bonds on the market with eight years left to maturity : Ackerman Co. has 9 percent coupon bonds on the market with eight years left to maturity.

Compares types of equity and debt financing alternatives : Create a 7- to 10-slide presentation with detailed speaker notes that compares types of equity financing and debt financing alternatives.

User Account

All Pages