Assume That the German Mark Spot Rate Is $0

question 11

Multiple Choice

Assume that the German mark spot rate is $0.5891 and the six-month forward rate is $0.5971. Also, assume that the six-month Eurodollar rate is 6%.
-When the current spot exchange rate exceeds the exercise price which of the following combinations of statements is true?
(i) A call option is in the money.
(ii) A call option is out of the money.
(iii) A put option is in the money.
(iv) A put option is out of the money.

• A) (i) and (ii)
• B) (i) and (iii)
• C) (i) and (iv)
• D) (ii) and (iv)

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