Compute the total net profit-loss-what is the rate of return

Assignment Help Financial Management

Reference no: EM131323242

A. El Paso Widget Inc. bought Euro call option for a strike price of $1.10 for March, 2014 paying 15.25 cents per unit. When they exercised the option, the spot price was $ 1.36. There are 62,500 units per Euro option.

i. What is the break-even point for this option?

ii. Compute the total net profit/loss. What is the rate of return?

B. ABC corp. bought SF currency put option for April 2007, for a strike price of $0.8055 per SF. They paid a premium of 16.2 cents per unit. At the time when ABC Corporation considered exercising the put, the spot price was $ 0.6125 per SF. There are 62,500 units in a SF currency option.

i. What is the break-even point for this option?

ii. Is it worthwhile exercising this option? Compute the total net profit/loss and the rate of return.

Reference no: EM131323242

Questions Cloud

What can you do now to integrate the experiences : What can you do now to integrate the experiences and insights you had in this course with your personal and professional development goals - What impact has your improved understanding had (or you anticipate it will have) on the value you will brin..

Prepare journal entry to record payment of combination costs : Prepare the journal entry to record the payment of combination costs. Determine consolidated net income for the year ended December 31, 20x2. Determine consolidated additional paid-in capital at December 31, 20x2.

Assuming costs and benefits are incurred at end of year : A city has learned that by buying larger garbage trucks, it could reduce labor costs for garbage removal. Note: All the dollar amounts below are in this year's dollars (constant dollars). Cost of trucks today is $400,000. Assuming the costs and benef..

How might these words be used to describe gp : How might the GP crossover process be changed to allow GP to relax the requirement that the execution of every sub tree return a value?

Compute the total net profit-loss-what is the rate of return : El Paso Widget Inc. bought Euro call option for a strike price of $1.10 for March, 2014 paying 15.25 cents per unit. When they exercised the option, the spot price was $ 1.36. There are 62,500 units per Euro option. What is the break-even point for..

Draw a graph of all of the distinct state-space nodes : In addition to these nodes, show also all of the nodes and arcs (properly labeled) on a path to the solution.

Dangers of having a team that is inexperienced : What are the dangers of having a team that is inexperienced in agile methodology, including the PM? How can an organization overcome this potential risk?

The bond first and then find the yield to maturity : A bond has a current yield of 7%, a coupon rate of 8% with semiannual payments, a face value of $1,000 and matures in 10 years. What is its Yield to Maturity? (Hint: You have to find the price of the bond first and then find the Yield to Maturity)?

Advantages of business process outsourcing : Question 1. List three advantages of Business Process Outsourcing. Please use current examples. Question 2. List and describe three general business categories that can be outsourced.

User Account

All Pages