107 794
Assignments Done
100%
Successfully Done
In September 2024

# Answer to Question #204611 in Finance for sanjeet

Question #204611

2.1 Suppose you long one Australian dollar call and one Australian dollar put with an exercise exchange rate of 0.75 (USD/AUD). The price of call and the price of put is USD0.06. Using the 15-period (spot) exchange rates given below, answer parts (a)-(c). Time Spot Exchange Rate (USD/AUD) 0 0.35 1 0.40 2 0.45 3 0.50 4 0.55 5 0.60 6 0.65 7 0.70 8 0.75 9 0.80 10 0.85 11 0.90 12 0.95 13 1.00 14 1.05 15 1.10 (a) Compute the net call payo, net put payo and net combined payo.

(b) Plot separately the Net Long call payo, the net long put payo and the net combined payo.

(c) Name and provide denition of the shape of the combined payo obtained from part (b)?

1
2021-06-09T10:23:31-0400

1a) Net call payo : ( 0.75×0.06)+(0.351×0.75)+ (0.45×1.10)

(0.045+0.26325+0.495)= 0.80325

1b) Net put payo: (0.75×0.95)× 10

0.7125×10=7.125

1c) Net combined payo: ( (0.80325+7.125)= 7.92825

B) \\\

C) half cyclic Curved

Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!