Highest net profit possible on the option for the speculator

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Reference no: EM131886567

1. Assume that a speculator purchases a put option on British pounds (with a strike price of $1.50) for $.05 per unit. A pound option represents 31,250 units. Assume that at the time of the purchase, the spot rate of the pound is $1.51 and continually rises to $1.62 by the expiration date. The highest net profit possible on the option for the speculator based on the information above is:

a.$1,562 b. -$1,562 c. -$1,250 d. -$1,250 e. None of the above

Please show forumla and work

2. If a company loses $1,000 in a fraud, it will have to generate $1,000 in additional revenue to make up for the fraud.

True

False

Reference no: EM131886567

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