For the Following Problem(s), Please Include a Copy of the Cumulative

question 25

Multiple Choice

For the following problem(s) , please include a copy of the cumulative standard normal tables.
-Suppose the current exchange rate is $1.62/£,the interest rate in the United States is 5.25%,the interest rate in the United Kingdom is 4%,and the volatility of the $/£ exchange rate is 18%.Using the Black-Scholes formula,the price of a six-month European call option on the British pound with a strike price of $1.60/£ will be closest to:

• A)$0.040/£.
• B)$0.059/£.
• C)$0.078/£.
• D)$0.097/£.

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Definitions:

Quality

The degree to which a product, service, or process meets predetermined criteria or standards, often relating to effectiveness, reliability, and satisfaction.

Capacitive Reactance

The opposition that a capacitor offers to alternating current, depending on the frequency of the current and the capacitor's value, measured in ohms.

Capacitive Reactance

The measure of the opposition that a capacitor presents to alternating current, due to the electric field created in the capacitor.

Ammeter

An instrument for measuring the flow of electric current in amperes.