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What should be the spot rate at the time option is exercised

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Reference no: EM132753285

A speculator is purchasing three European put options of euro with the following features:

Contract size: EUR62,500
Strike price: USD1.1500
Premium: USD0.025

Problem i) Calculate his net profit or loss on the option if EUR is traded at USD1.1205 at maturity.

Problem ii) What should be the spot rate at the time the option is exercised for the speculator to breakeven?

Reference no: EM132753285

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