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(13) Using the information provided below answer the following three questions. Put options on Australian dollar Todays date: December 1, 2020 Spot Exercise price January
- (13) Using the information provided below answer the following three questions.
Put options on Australian dollar Todays date: December 1, 2020
| Spot | Exercise price | January 2021 maturing put option |
| 75.29 | 74.00 | 1.30 |
| 75.29 | 74.50 | 2.00 |
- What is the intrinsic value for January 2021 maturing put option with an exercise price of 74.00? Show or explain your answer.
- For January 2021 maturing put option with an exercise price of 74.00, explain what will happen to its intrinsic value as we get closer and closer to the expiration date.
- For January 2021 maturing put option with an exercise price of 74.50, explain what will happen to its time value as we get closer and closer to the expiration date.
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An Introduction To Derivatives And Risk Management
Authors: Don M. Chance, Roberts Brooks
7th Edition
0324321392, 9780324321395
