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3 Question 6 (0.11 points) The Spot exchange rate now on your currency transaction date is $1.25/ Pound. The exercise (strike) price of the option you bought to hedge risk is $1.27 / Pound. Which statement below is correct? 6 a) $0.02 intrinsic value if a PUT option, - $0.02 intrinsic value if a CALL option b) the option's premium paid for the hedge does not affect the 'exercise/ don't exercise' decision c) - $0.02 intrinsic value if a PUT option, $0.02 intrinsic value if a CALL option d) Exercise only when the intrinsic value exceeds the option premium paid Question 7 (0.11 points) The Spot is $0.75 / $Ca. A CALL option with exercise price of $0.755 and expiration in 4 months has a premium of $0.015 / $Ca Therefore, Premium $0.015 = Intrinsic value - $0.005 + Time Value $0.02 a) True b) False