1. In a bank, there are two quotation on the exchange rate board for Japanese Yen. $0.0041 $0.0039 Which quotation is the bank’s bid rate? Calculate the bid-ask percentage spread.
2. Richard purchased a call option on British pounds for $.03 per unit. The strike price was $1.58 and the spot rate at the time the option was exercised was $1.42. Assume there are 31,250 units in a British pound option. What was Richard’s net profit on this option?
3. Angel purchased a put option on British pounds for $.03 per unit. The strike price was $1.76 and the spot rate at the time the pound option was exercised was $1.50. Assume there are 31,250 units in a British pound option. What was Angel’s net profit on the option?