For a $150/£ Call Option with an Initial Premium of $0

question 47

Multiple Choice

For a $1.50/£ call option with an initial premium of $0.033/£ and a phi value of -0.2, after an increase in the foreign interest (the pound sterling rate) rate from 8% to 9% - the new option premium would be:

• A) $0.035/£.
• B) $1.48/£.
• C) $0.031/£.
• D) $0.032/£.

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Definitions:

Internal Controls

Procedures and processes implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

Accounts Testing

The evaluation and verification of financial account records through various audit procedures to ensure the accuracy and reliability of financial statements.

Illegal Act

An action that is forbidden by law and subject to criminal or civil penalties.

Auditors

Professionals who examine financial records to ensure their accuracy and compliance with applicable rules and regulations.