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Future spot price at which the speculator will only break

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Reference no: EM132507431

A speculator is considering the purchase of five three-month British pound put options with a striking price of $1.60 per £. The premium is $0.04 per pound. The standard size of each option contract is 10,000 pounds.

- Determine the future spot price at which the speculator will only break even.

- What would be the speculator's profit if the pound depreciates to $1.57 per £?

Reference no: EM132507431

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