Question
The current spot exchange rate is $1.110 = 1.00 and the three-month forward rate is $1.115 = 1.00. Consider two American call option contracts that
The current spot exchange rate is $1.110 = 1.00 and the three-month forward rate is $1.115 = 1.00. Consider two American call option contracts that expires in three months with a strike price of $1.100 = 1.00 and premium of $.007 per unit. An option contract specifies 125,000. Immediate exercise of this option will generate a profit of _____.
$375
$750
$2,125
$2,500
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A First Course in Quantitative Finance
Authors: Thomas Mazzoni
1st edition
9781108411431, 978-1108419574
