Rememebr GBP is the British pound and the symbol for GBP is £. Nike is expecting a payment of £10 mio in 6 months (they are long GBP). The Forward is: $1.3000/E Nike Purchases a 6 month £ Put/$ Call Struck at $1.3000/£, for $.05/E 1- How much will it cost them to buy the GBP put, and 2-what is the break even on the ENTIRE position (the expected revenue less the option premium)? Hint: Remember the gain and the break even occur as GBP rises. OA. The option costs $500,000 and the break even is $1.3450/E OB. The option costs $600,000 and the break even is $1.4050/E OC. The option costs $500,000 and the break even is $1.3500/£ OD. The option costs £400,500, and the break even is $1.3550/E
Rememebr GBP is the British pound and the symbol for GBP is £. Nike is expecting a payment of £10 mio in 6 months (they are long GBP). The Forward is: $1.3000/E Nike Purchases a 6 month £ Put/$ Call Struck at $1.3000/£, for $.05/E 1- How much will it cost them to buy the GBP put, and 2-what is the break even on the ENTIRE position (the expected revenue less the option premium)? Hint: Remember the gain and the break even occur as GBP rises. OA. The option costs $500,000 and the break even is $1.3450/E OB. The option costs $600,000 and the break even is $1.4050/E OC. The option costs $500,000 and the break even is $1.3500/£ OD. The option costs £400,500, and the break even is $1.3550/E
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Rememebr GBP is the British pound and the symbol for GBP is £.
Nike is expecting a payment of £10 mio in 6 months (they are long GBP). The Forward is : $1.3000/E
Nike Purchases a6 month £ Put/S Call Struck at $1.3000/ £, for $.05/ E
1- How much will it cost them to buy the GBP put, and
2- what is the break even on the ENTIRE position (the expected revenue less the option premium)?
Hint: Remember the gain and the break even occur as GBP rises.
OA. The option costs $500,000 and the break even is $1.3450/£
B. The option costs $600,000 and the break even is $1.4050/E
OC. The option costs $500,000 and the break even is $1.3500/ £
O D. The option costs E400,500, and the break even is $1.3550/E
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