A Call Option on UK Pounds Has a Strike Price

question 25

Multiple Choice

A call option on UK pounds has a strike price of $2.05/£ and a cost of $0.02. What is the break-even price for the option?

• A) $2.03/£
• B) $2.07/£
• C) $2.05/£
• D) The answer depends upon if this is a long or a short call option.

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Definitions:

Inversion Valve

A normally open air brake valve used for emergency applications of tractor brakes for a one-time stop during a total system failure. Hold-off air is dumped in relation to application pressure so that spring chamber force can effect emergency service braking. Incorporated in some modulating valves.

Tractor Protection Valve

A safety valve in commercial vehicles that prevents air loss in the tractor in the event of a trailer breakaway or air line failure.

FMVSS-121 Compliant

FMVSS-121 compliant means adhering to the Federal Motor Vehicle Safety Standard 121, relating to air brake systems in heavy vehicles.

Air Reservoirs

Tanks used in automotive and industrial applications to store compressed air, providing a supply for various functions such as braking.