What Are the Major Determinants of the Value of a Currency

question 10

Essay

What are the major determinants of the value of a currency option (call and put)?
a. Briefly justify each determinant and its direction.
b. What is the relation between a currency put and a currency call (put-call parity)?
c. In what circumstances would an American-type option be exercised before expiration?
(You may provide an example to illustrate your answers.)

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Definitions:

Major Depression

A mental disorder characterized by a persistent and severe low mood accompanied by low self-esteem and loss of interest or pleasure in normally enjoyable activities.

Anorexia Nervosa

An eating disorder characterized by a low weight, fear of gaining weight, and a strong desire to be thin, leading to food restriction.

Elaborate Meals

Complex and often finely prepared dishes or series of dishes served in a high degree of detail and sophistication.

Emaciated

The physical condition of someone being abnormally thin or weak, often due to severe malnourishment or illness.