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Suppose the current exchange rate between US dollars and British Pounds is $1.50 per Pound. 8% is the continuously compounded, risk free interest rate for
Suppose the current exchange rate between US dollars and British Pounds is $1.50 per Pound. 8% is the continuously compounded, risk free interest rate for the USD, while the rate is 4% for the Pound. A USD-denominated call option allows its owner to purchase 100 Pounds for $100 in one year, and it's price is $20.00. There exists an otherwise identical put option, what is it's price?
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