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Homework answers / question archive / 1) I buy a call option on $ with a strike price of Rp12,000/$ for three months, and pay a premium of Rp200

1) I buy a call option on $ with a strike price of Rp12,000/$ for three months, and pay a premium of Rp200

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1) I buy a call option on $ with a strike price of Rp12,000/$ for three months, and pay a premium of Rp200. Draw a pay-off diagram for me (call buyer) and for the seller of the option.

2. If the exchange rate becomes Rp10,000/$, should I exercise my right? Explain briefly. How much the loss or gain?

3. Suppose an Indonesian importer has to pay $1million. How he can hedge using the option?

4. Should he buy or sell a call or put option on $? Draw the diagram describing the situation.

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