British pound put option has premium

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Reference no: EM131558646

Assume that a British pound put option has a premium of $.03 per unit and an exercise price of $1.60. The present spot rate is $1.61. The expected future spot rate on the expiration date is $1.51. The option will be exercised on this date, if at all. What is the expected per unit net gain (or loss) resulting from purchasing the put option?

a. $.01 loss

b. $.06 gain

c. $.05 gain

d. $.09 loss

Reference no: EM131558646

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