Suppose the Current Spot Rate for the Australian Dollar Is

question 7

Multiple Choice

Suppose the current spot rate for the Australian dollar is U.S.$0.8321.The intrinsic value of an A$50,000 call option with an exercise price of U.S.$0.8195 is

• A)$0
• B)$630
• C)$740
• D)$2,340

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Definitions:

Annual Shareholder Meetings

A yearly gathering where company executives report to shareholders on the firm's performance and strategy.

Receive Interest

Earning income on an investment, such as a bond or savings account, based on the interest rate over time.

Limited Liability

A legal structure that limits the extent of financial liability for investors to the amount invested in a company.

Incorporation

The legal process of forming a corporation, which is a type of business entity recognized as separate from its owners.