Should cachita buy a put on yen or a call on yen

Assignment Help Financial Management

Reference no: EM132025513

Cachita Haynes at Vatic Capital. Cachita Haynes works as a currency speculator for Vatic Capital of Los Angeles. Her latest speculative position is to profit from her expectation that the U.S. dollar will rise significantly against the Japanese yen. The current spot rate is ¥122.00/$. She must choose between the following 90-day options on the Japanese yen: Option Strike Price Premium Put on yen ¥/$ 125 $/¥ 0.00003 Call on yen ¥/$ 125 $/¥ 0.00046

a. Should Cachita buy a put on yen or a call on yen?

b. What is Cachita's breakeven price on the option purchased in part (a)

c. Using your answer from part (a), what is Cachita's gross profit and net profit (including premium) if the spot rate at the end of 90 days is ¥140.00/$?

Reference no: EM132025513

Questions Cloud

The firm repurchases shares at the current market price : Assume there are no personal taxes and the firm repurchases shares at the current market price.

Expects to earn the same annual rate of return : Jackson expects to earn the same annual rate of return after 3 years from today as the annual rate implied from the past and expected values given in problem.

Calculate your gain or loss from the forward contract : Suppose that at expiration, the price of the stock is $1,500. Calculate your gain or loss from the forward contract.

Considered useful for projecting future firm performance : Accounting values such as net income are commonly considered useful for projecting future firm performance because ____________.

Should cachita buy a put on yen or a call on yen : Cachita Haynes works as currency speculator for Vatic Capital of Los Angeles. Should Cachita buy a put on yen or a call on yen?

Weighted average cost of capital for new england singers : What is the weighted average cost of capital for New England Singers?

Relationship between bond prices and the YTMs : I only need to see the final graph. What is the relationship between bond prices (values) and the YTM’s?

Calculate the WACC of WTC : calculate the WACC of WTC.

What is the project NPV : A project has annual cash flows of $6,000 for the next 10 years. what is the project's NPV?

User Account

All Pages