The Existing Spot Rate of the Canadian Dollar Is

question 150

Multiple Choice

The existing spot rate of the Canadian dollar is $.82. The premium on a Canadian dollar call option is $.04. The exercise price is $.81. The option will be exercised on the expiration date if at all. If the spot rate on the expiration date is $.87, the profit as a percent of the initial investment (the premium paid) is:

• A)0 percent.
• B)25 percent.
• C)50 percent.
• D)150 percent.
• E)none of the above

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Definitions:

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