Carl Is a US Option Writer

question 76

Multiple Choice

Carl is a US option writer. In anticipation of a depreciation of the British pound from its current level of $1.50 to $1.45, he has written a call option with an exercise price of $1.51 and a premium of $.02. If the spot rate at the option's maturity turns out to be $1.54, what is Carl's profit or loss per unit (assuming the buyer of the option acts rationally) ?

• A) -$0.01
• B) $0.01
• C) -$0.04
• D) $0.04
• E) -$0.03

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Definitions:

Policy Practitioners

Professionals engaged in the practical aspects of developing, advocating for, and implementing policies within governmental or organizational structures.

Initiative

The ability to assess and initiate things independently, often to bring about change or take charge in situations.

Coalition Building

The process of bringing together multiple stakeholders or organizations to form an alliance towards a common goal.

Common Strategy

A widely used approach or method to achieve a specific goal or overcome a challenge, shared among various groups or individuals.