The Current Spot Exchange Rate Is $1 $\ddot { l } _{\$}$

question 8

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 with a strike price of $1.50 = €1.00.Immediate exercise of this option will generate a profit of

• A)$6,125.
• B)$6,125/(1 + \(\ddot { l } _{\$}\) )^3/12.
• C)negative profit,so exercise would not occur.
• D)$3,125.

Comprehend the principles of accord and satisfaction and its enforceability.

Identify sufficient consideration in contractual agreements.

Explain the concept of promissory estoppel and its application.

Analyze contract modifications and their enforceability.

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