Suppose the Exchange Rate Between the U

question 69

Multiple Choice

Suppose the exchange rate between the U.S.dollar and the British pound is US$1.50 = BP1.00.If the interest rate is 6% per year,what is the adjusted price of the British pound when valuing a foreign currency option with an expiration of one year?

• A)$1.9050
• B)$1.4151
• C)$0.7067
• D)$1.5900

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Definitions:

Probability

A measure of the likelihood that an event will occur, often expressed as a number between 0 and 1.

Behavior

The actions or reactions of a person or animal in response to external or internal stimuli.

Punishment

The imposition of a penalty as a result of an offense, with the intention of decreasing a specific behavior or action through negative consequences.

Skinner Box

An experimental apparatus designed by B.F. Skinner for studying behavioral conditioning in animals, typically involving a lever and a food dispenser.