You Are a Speculator Who Sells a Call Option on Swiss

question 152

Multiple Choice

You are a speculator who sells a call option on Swiss francs for a premium of $.06, with an exercise price of $.64. The option will not be exercised until the expiration date, if at all. If the spot rate of the Swiss franc is $.69 on the expiration date, your net profit per unit, assuming that you have to buy Swiss francs in the market to fulfill your obligation, is:

• A) -$.02.
• B) -$.01.
• C) $.01.
• D) $.02.
• E) none of the above

Understand how in-group and out-group perceptions influence social biases.

Comprehend the availability heuristic and its impact on judgment.

Recognize the relationship between personal frustrations and prejudice.

Understand the effects of media and information availability on personal fears and biases.

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Definitions:

Eighteen Months

A period of time equal to one and a half years.

Note Receivable

A written promise that someone will pay a business a specific sum of money on a specified date or on demand.

Days' Sales in Receivables

A financial ratio that measures the average number of days that receivables remain outstanding before being collected.

Allowance for Doubtful Accounts

Allowance for doubtful accounts is a financial accounting provision made for receivables that may not be collectible, estimating the portion of outstanding receivables likely to be uncollectable.