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An American company expects to receive 500,000 from sales in England at the end of 6 months. The current exchange rate is $1.60/. The company

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An American company expects to receive 500,000 from sales in England at the end of 6 months. The current exchange rate is $1.60/. The company would like to guarantee that it will get at least this rate when it receives the pounds, so that it will receive at least $800,000. You are given: (i) The continuously compounded risk-free interest rate in dollars is 4%. (ii) The continuously compounded risk-free interest rate in pounds is 7%. (iii) Relative volatility of the currencies is 0.1 . (iv) A 2-period Cox-Ross-Rubinstein binomial tree is used to determine the price of options. Determine the cost of an option, in dollars, which will guarantee the current exchange rate at the end of 6 months

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