International Automobile Parts (IAP) holds a call option to purchase US dollars. The strike price on the
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International Automobile Parts (IAP) holds a call option to purchase US dollars. The strike price on the call option is JPY 115/USD. IAP paid JPY 10 for the option. The spot price is JPY 120/USD, and the option expires today. Should IAP exercise the option? What is IAP’s payoff?
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If IAP does not exercise it loses 10 If IAP does exe...View the full answer
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