Assume That the German Mark Spot Rate Is $0

question 2

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%.
-You paid $0.1 for a one-year European call option for £1 with the strike price of $1.7/£.At which exchange rates on the maturity date will you exercise your option?

• A) Less than $1.7/£
• B) Less than $1.8/£
• C) More than $1.7/£
• D) More than $1.8/£

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Definitions:

Urban Growth

The expansion of cities and towns as a result of population increase and infrastructural development, often impacting the surrounding environment and agricultural lands.

Developing Countries

Countries characterized by less industrialization, a lower quality of life, and typically lower scores on the Human Development Index (HDI) than those seen in developed nations.

Urban Sprawl

The spread of city development into areas outside of traditional urban centers, often characterized by low-density and car-dependent communities.

Squatter Settlement

An area of unauthorized or informal housing, often lacking basic services, created by people with nowhere else to live.