Find the Dollar Value Today of a 1-Period At-The-Money Call $i _ {€ } = 2 \%$

question 58

Multiple Choice

Find the dollar value today of a 1-period at-the-money call option on €10,000.The spot exchange rate is €1.00 = $1.25.In the next period,the euro can increase in dollar value to $2.00 or fall to $1.00.The interest rate in dollars is i_$ = 27.50%; the interest rate in euro is $i _ {€ } = 2 \%$ .

• A)$3,308.82
• B)$0
• C)$3,294.12
• D)$4,218.75

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Definitions:

Productivity

The measure of output per unit of input, reflecting the efficiency with which factors of production are utilized.

Productivity

A measure of the efficiency of production, often expressed as the ratio of outputs to inputs in the production process.

Real GDP Per Person

An economic metric that measures the value of all goods and services produced within a country in a specified period, adjusted for inflation and divided by the population.

Inward-Oriented Policy

An economic policy strategy that emphasizes domestic industry protection and self-sufficiency over global trade.