1. Compute the forward discount or premium for the Canadian dollar whose 90-day forward rate is $1.2785 and spot rate is $1.2536. State whether your answer is a discount or premium.
2. An investor purchased a call option on British pounds for $.02 per unit. The strike price was $1.30 and the spot rate at the time the option was exercised was $1.33. Assume there are 31,250 units in a British pound option. What was the net profit on this option?
3. An investor purchased a put option on British pounds for $.03 per unit. The strike price was $1.30 and the spot rate at the time the pound option was exercised was $1.33. Assume there are 31,250 units in a British pound option. What was Alice’s net profit on the option?