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Euros are trading at $1.15 per euro in the spot market. A call option with 3 months to expiration is trading at $0.01 per euro.
Euros are trading at $1.15 per euro in the spot market. A call option with 3 months to expiration is trading at $0.01 per euro. The strike price for the call is $1.18 per euro. The interest rate (in dollars) is 4% per annum or 1% for the three-month period. What is the profit/loss for a speculator on a 10,000 contract with the strike price of $1.18 if the spot price was $1.20 at the time of the expiration of the contract?
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