Find the Value of a European Foreign Currency Call If

question 45

Multiple Choice

Find the value of a European foreign currency call if the spot rate is $5.25,the exercise price is $5.40,the domestic interest rate is 6.1 percent,the foreign interest rate is 5.5 percent,the call expires in one month,and the volatility is .32.(The interest rates are continuously compounded. )

• A)$0.167
• B)$0.15
• C)$0.140
• D)$0.131
• E)none of the above

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Definitions:

Equitable Principles

Legal rules intending to enforce fairness and justice, often applied in situations where traditional laws might produce an inequitable outcome.

Money Damages

Compensation awarded to a plaintiff to recover losses suffered as a result of the defendant's wrongful actions.

Chancellor

A senior position in various institutions; often the head of a university or a high-level judicial officer in some legal systems.

Medieval England

A historical period in England spanning from the 5th to the late 15th century, characterized by feudalism, the establishment of the monarchy, and significant cultural developments.