Reference no: EM132531393
Quantitative questions 1. The spot rate of the New Zealand dollar is S.78. A call option on New Zealand dollars with a-year expiration date has an exercise price of S.9and a premium of S.04. A put option on New Zealand dollars at the money with a l-year expiration date has a premium of S.04. You expect that the New Zealand dollar's spot rate will decline over time and will be S.72 in 1 year.
a. Today. Dawn purchased call options on New Zealand dollars with a l-year expiration date.
Estimate the profit or loss per unit at the end of1 year. [Assume that the options would be
CXCreiscu on ne expiratOn de or not at l
b. Today, Mark sold put options on New Zealand dollars at the money with a 1-year expiration date. Estimate the profit or loss per unit for Mark at the end of I year. [Assume that the options would be exercised on the expiration date or not at all.]
2. You go to a bank and are given these quotes:
You can buy a euro for 14 pesos.
The bank will pay you 15 pesos for a euro.
You can buy a U.S. dollar for .1 euros.
The bank will pay you .I1 euros for a U.S. dollar You can buy a U.S. dollar tor 11 pesos.
The bank will pay you 10 pesos for a U.S. dollar
You have S5,000, Can you use triangular arbitrage to generate a profir? If so, explain the order of the transactions that you would execute and the profit that you would earn. If you cannot earn a profit from triangular arbitrage, explain why.
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Describe why the primary goal of the financial manager
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Discuss accounting for bad debts are the allowance approach
: Discuss accounting for bad debts are the allowance approach and the direct write off approach. Briefly describe the difference between the two
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Estimate the profit or loss per unit at the end of1 year
: Quantitative questions 1. The spot rate of the New Zealand dollar is S.78. A call option on New Zealand dollars with a-year expiration date has an exercise
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