Samuel decides to buy call options in Singapore dollars. What will be Samuel's break-even spot rate (in direct format)? Keep all decimal places. Do not include currency in your answer.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
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Chapter22: International Financial Management
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(Call Option Break-Even Spot Rate) Samuel Samosir works for Peregrine Investments in Jakarta,
Indonesia. He focuses his time and attention on the U.S. dollar/Singapore dollar ($/S$) cross-rate.
The current spot rate is $1.39/S$. After considerable study, he has concluded that the Singapore
dollar will appreciate versus the U.S. dollar in the coming 90 days, probably to about $1.44/S$. He
is considering trading options to profit and has the following options on the Singapore dollar to
choose from
Option choices on the Singapore dollar:
Strike price (US$/Singapore dollar)
Premium (US$/Singapore dollar)
Call on S$
$1.356
$0.047
Put on S$
$1.37
$0.006
Samuel decides to buy call options in Singapore dollars. What will be Samuel's break-even spot rate
(in direct format)? Keep all decimal places. Do not include currency in your answer.
Transcribed Image Text:(Call Option Break-Even Spot Rate) Samuel Samosir works for Peregrine Investments in Jakarta, Indonesia. He focuses his time and attention on the U.S. dollar/Singapore dollar ($/S$) cross-rate. The current spot rate is $1.39/S$. After considerable study, he has concluded that the Singapore dollar will appreciate versus the U.S. dollar in the coming 90 days, probably to about $1.44/S$. He is considering trading options to profit and has the following options on the Singapore dollar to choose from Option choices on the Singapore dollar: Strike price (US$/Singapore dollar) Premium (US$/Singapore dollar) Call on S$ $1.356 $0.047 Put on S$ $1.37 $0.006 Samuel decides to buy call options in Singapore dollars. What will be Samuel's break-even spot rate (in direct format)? Keep all decimal places. Do not include currency in your answer.
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