NUMERICAL PROBLEMS
  1. On the basis of the following figures, find out:
    1. The intrinsic value of a British Pound options contract assuming: (i) call option; and (ii) put option
    2. Gain/loss to the option buyer assuming: (i) call option; and (ii) put option
    3. Gain/loss to the option seller assuming: (i) call option; and (ii) put option
      1. Spot rate on maturity US $ 1.68/£
      2. Strike rate US $ 1.60/£
      3. Premium US $ 0.05/£
  2. Three one-month forward deals were contracted respectively on the 27, 28 and 29 January 2004. What would be the settlement date?
  3. If the rate of exchange is:
    US $ 2.0000 − 2.0100/£ in New York
    US $ 1.9800 − 1.9810/£ in London

    Explain how an arbitrageur would gain.

  4. If a direct quote is Rs 45/US $, how can this rate be presented in an indirect ...

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