When a Currency Call Option Is Classified as "In the Money

question 140

Multiple Choice

When a currency call option is classified as "in the money," this indicates that

• A) the spot rate of the currency is less than the exercise price of the option.
• B) the spot rate of the currency is greater than the exercise price of the option.
• C) the buyer of the option would generate a profit; that is, the spot rate would exceed the sum of the exercise price and the premium paid.
• D) the buyer of the option would generate a profit; that is, the exercise price would exceed the sum of the spot rate and the premium paid.

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