You Are a Speculator Who Sells a Call Option on Swiss

question 72

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

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Definitions:

Gastrin

A hormone released by the stomach mucosa; stimulates the gastric glands to secrete pepsinogen.

Acid-Secreting Glands

Glands in the body that release acid, such as the gastric glands in the stomach which secrete hydrochloric acid.

Ascending Colon

The first part of the colon into which undigested food from the small intestine is passed, ascending on the right side of the abdomen.

Transverse Colon

A part of the large intestine that crosses the abdomen horizontally from right to left, involved in the absorption of water and salts.