The Current Spot Exchange Rate Is $1

question 60

Multiple Choice

The current spot exchange rate is $1.55 = €1.00; the three-month U.S.dollar interest rate is 2%.Consider a three-month American call option on €62,500 with a strike price of $1.50 = €1.00.What is the least that this option should sell for?

• A)$0.05*62,500 = $3,125
• B)$3,125/1.02 = $3,063.73
• C)$0.00
• D)none of the above

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Definitions:

Warn

To inform someone about a potential danger, problem, or other unpleasant situation in advance.

Face-to-Face Conversation

Direct communication between two or more individuals where they are in each other's physical presence, allowing for immediate feedback and personal interaction.

Storytelling

The art of conveying events, messages, or narratives through engaging and compelling narrative structures.

Business Communication

The sharing of information between people within an organization that is performed for the commercial benefit of the organization.