Currency options-which firms use currency call options

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Reference no: EM132066026

a. What are currency options? What are the ways in which firms use currency call options? If you were a speculator how would you use a call option?

b. Country risk is a critical consideration in direct foreign investments. What does country risk analysis involve?

c. A call option on US dollar is available with a strike price of GHS 4.400. Sumaila, a speculator, purchased the option for a premium of 0.2500 per USD. The USD spot rate on the day of expiration is 4.500.

a. Is the call option in the money? Explain.

b. How much profit/loss per unit did Sumaila make on this call option?

c. What is the net profit per unit to the seller of this call option?

Reference no: EM132066026

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