Which of the Following Is True When a European Currency

question 3

Multiple Choice

Which of the following is true when a European currency option is valued using forward exchange rates?

• A) It is not necessary to know the domestic interest rate or the spot exchange rate
• B) It is not necessary to know either the foreign or domestic interest rate
• C) It is necessary to know the difference between the foreign and domestic interest rates but not the rates themselves
• D) It is not necessary to know the foreign interest rate or the spot exchange rate