q2

What is a put option on foreign currency? What is the distinctive feature of European options? With the help of diagrams, explain and discuss the effects of reductions in exercise price and exchange- rate variance on the price of a European call option on foreign currency. What is the distinctive feature of American options? Why must they always be at least as expensive as European options that are identical in other respects? Why must an American put option sell for at least as much as its intrinsic value