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International Financial Management: An Analytical Framework, 2nd Edition by Pearson
book

International Financial Management: An Analytical Framework, 2nd Edition by Pearson

by Thummuluri Siddaiah
December 2025
Intermediate to advanced
561 pages
27h 17m
English
Pearson India
Content preview from International Financial Management: An Analytical Framework, 2nd Edition by Pearson
CURRENCY OPTIONS 247
The profitability of a short straddle is tabulated below:
Spot rate (USD/INR) at the expiration of option
61.5000 61.5028 61.5678 61.6328 62.0000
Cash flows on call option 0.0350 0.0350 0.0350 (0.0300) (0.3972)
Cash flows on put option (0.0378) (0.0350) 0.0300 0.0300 0.0300
Net cash flows (0.0028) 0.0000 0.0650 0.0000 (0.3672)
As can be observed from the above table, there are two break-even points for a long straddle
at the spot price of 61.5028 and 61.6328. It is the same as in the long straddle. The maximum
lossoccurswhenthespotrateisequaltothestrikeprice.Inotherwords,thestraddlebuy ...
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Publisher Resources

ISBN: 9789332578869