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a 1-year call option on euros at a strike rate of $1.2497/ will cost the buyer $0.0633/, or 4.99%. But that assumed a volatility of
a 1-year call option on euros at a strike rate of $1.2497/ will cost the buyer $0.0633/, or 4.99%. But that assumed a volatility of 12.000% when the spot rate was $1.2673/. What would the same call option cost if the volatility was reduced to 10.500% when the spot rate fell to $1.2481/?
The same call option cost if the volatility was reduced to 10.500% when the spot rate fell to $11.2481/ would be $___/. (Round to four decimal places.)
us. Dollar/Euro. The table E indicates that a 1-year call option on euros at a strike rate of $1.2497/ will cost the buyer $0.0633/, or 4.99%. But that assumed a volatility of 12.000% when the spot rate was $1.2673/. What would the same call option cost if the volatility was reduced to 10.500% when the spot rate fell to $1.2481 /e? The same call option cost if the volatility was reduced to 10.500% when the spot rate fell to $1.2481/ would be $/. (Round to four decimal places.)Step by Step Solution
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