Chapter 2

A2
USD/CHF 1.0042-46
a. Base currency: USD
Quote currency: CHF
b. If you want to buy 1000 CHF, how many USD do you have to pay for the bank?
You have to pay: 1000*1.0046=$1004.6
If you want to sell 1000 CHF, how many USD do you get from the bank?
You get from the bank: 1000*1.0042=1004.2
B2
1.5550−1.5800 12
Forward discount= 𝑥 = -3.16%
1.5800 6

D1
POSSIBLE SPOT RATE OF CANADIAN NET PROFIT (LOSS) PER UNIT
DOLLAR ON EXPIRATION DATE TO LSU CORP.
$0.76 -0.02
0.78 0
0.80 0.02
0.82 0.04
0.85 0.07
0.87 0.09

D6
Sold call options
a. Loss per unit= 1.49+0.02-1.55= -0.04
b. Profit per unit= 0.02