Microsoft purchased a call option on pounds for a premium of $.03 per pound with an exercise price of $1.34; the option will not be exercised until the expiration date, if at all. If the spot rate on the expiration date is $1.33, Microsoft’s net profit per pound is (ignoring time value of money):
-$0.03 -$0.02 $0.01 $0.02 None of these
Question 10 (2.5 points) Which of the following statement about swaps is least accurate?
In a plain vanilla interest rate swap, the notional principal is swapped.
In a plain vanilla interest rate swap, fixed rates are traded for variable rates.
The default problem li.e. default risk] is the most important limitation to the swap market. Get Finance homework help today