A foreign currency is currently worth $1.50. The domestic and foreign risk-free interest rates are 5% and
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A foreign currency is currently worth $1.50. The domestic and foreign risk-free interest rates are 5% and 9%, respectively. Calculate a lower bound for the value of a 6-month call option on the currency with a strike price of $1.40 if it is
(a) European and
(b) American.
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