The Current Spot Exchange Rate Is $1 $\left( 1 + i _{\$} \right) ^ { 3 / 12 }$

question 9

Multiple Choice

The current spot exchange rate is $1.55 = €1.00 and the three-month forward rate is $1.60 = €1.00.Consider a three-month American call option on €62,500.For this option to be considered at-the-money,the strike price must be

• A)$1.60 = €1.00.
• B)$1.55 = €1.00.
• C)$1.55 × \(\left( 1 + i _{\$} \right) ^ { 3 / 12 }\) = €1.00 × \(\left( 1 + i _ { € } \right) ^ { 3 / 12 }\) .
• D)none of the options

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Definitions:

Input Device

A hardware device used to enter, or input, data (text, images, and sounds) and instructions (user responses and commands) into a computer.

Pen

A common writing instrument used for applying ink to a surface, typically paper, for writing or drawing.

Binary Language

The fundamental language of computers, consisting of just two numbers, 0 and 1, to represent all types of data and instructions.

0s And 1s

Represents the binary number system fundamental to computing, using only two digits: 0 and 1.