What will be your profit-loss if the exchange rate is nok, Finance Basics

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What will be your profit-loss if the exchange rate is nok

Problem

Spot: NOK 8.0000/USD
Forward: NOK 8.2000/USD
12-month USD Libor: +2.00%
12-month NOK Libor: +8.00%
WACC: 10.00%

Call option: strike price USD 0.125/NOK, premium USD 0.0025/NOK
Put option: strike price USD 0.125/NOK, premium USD 0.0035/NOK

You have just invested USD 1M in the "carry trade". (you have borrowed USD 1M and you have invested in the NOK). What will be your profit/loss if the exchange rate is NOK 8.5/USD one year from now?

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Finance Basics: What will be your profit-loss if the exchange rate is nok

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