1)An US agent will receive 1 million TL in 6 month time and will convert them to TL in 6 month time.

This agent hedges his position against adverse evolution of $/TL by buying 7.60- strike European option.

Domestic and foreign continuously compounded risk-free interest rates are 13% and 0.75%.

The volatility of $/TL = 30% and the spot $/TL=7.30.

Determine this option premium with Black and Scholes method.

2)Assume a European 9.30-strike put based on Euro/TL maturing in 7 month is quoted at 0.40.

The spot currency exchange=9.00, domestic and foreign CCIR are 13% and 0.75%.

Determine the premium of the European 9.30-strike call haven similar features.