What Is the Lower Bound of a European Foreign Currency

question 29

Multiple Choice

What is the lower bound of a European foreign currency call if the spot rate is $2.25,the domestic interest rate is 5.5 percent,the foreign interest rate is 6.2 percent,the option expires in three months,and the exercise price is $2.20? (The interest rates are continuously compounded. )

• A)$0.0457
• B)$0.05
• C)$0.0793
• D)$0.0529
• E)none of the above

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Definitions:

Stadium

A large, usually outdoor structure for sports, concerts, or other events, featuring a field or stage and seating for spectators.

Football Game

A sporting event involving two teams that compete to score points by advancing a ball into the opposing team's end zone, governed by a set of rules.

NFL Teams

Professional American football teams competing within the National Football League, which is divided into two conferences: the American Football Conference (AFC) and the National Football Conference (NFC).

Player Draft

A process in sports leagues where teams select eligible players to join their roster from a pool of candidates.