Question
Callaghan is an importer who is scheduled to make a large payment in Euros on June 10, 2021. Today's spot exchange rate is quoted at
Callaghan is an importer who is scheduled to make a large payment in Euros on June 10, 2021. Today's spot exchange rate is quoted at US$1.17/1.00. In order to hedge her FX exposure, she buys an american call with a strike price at and expiration on July 10, 2021. Please mark the only INCORRECT answer about this call option.
a. If on 6/10/21 Mary exercises the call, she would make a profit of US$0.15 per contract call
b. If on 6/10/21 Mary exercises the call, she would make a profit of US$0.10 per call
c. On 3/10/21 Mary cannot exercise the call because it is out-the-money
d. If on 6/10/21 Mary exercises the call, she could buy Euros for US$1.20/1.00
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