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Finra Exam Series-7 Topic 7 Question 16 Discussion
Actual exam question for
Finra's
Series-7 exam
Question #: 16
Topic #: 7
[All Series-7 Questions]
Topic #: 7
Bubba is long spot Canadian dollars at 0.7400. If he wants to buy one put option on Canadian dollars with a strike price of 74 and a cost of $0.35, what is Bubba's breakeven price for Canadian dollars?
Suggested Answer:
D
0.7435. The put protects against a decline in the exchange rate for Canadian dollars. However, the cost of the put raises the breakeven point to 0.7435 (0.7400 + 0.0035).
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