One Year forward rate is $1.7300/pound. Consider call and put options (on pound) defined as below: Maturity-
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Question:
One Year forward rate is $1.7300/pound.
Consider call and put options (on pound) defined as below:
Maturity- One Year. Strike Price- $1.7300/pound.
Premium on call is 4 cents(US) per pound.
This means that, to avoid arbitrage, the premium on put must be:
a) more than 4 cents per pound
b) 4 cents per pound
c) less than 4 cents per pound
d) need more data
Expert Answer:
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