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The current spot exchange rate is $1.55/ and the three-month forward rate is $1.60/. Consider a three-month American call option on 62,500 with a strike
The current spot exchange rate is $1.55/ and the three-month forward rate is $1.60/. Consider a three-month American call option on 62,500 with a strike price of $1.52/. If you pay an option premium of $2,500 to buy this call, at what exchange rate will you break-even?
a. $1.54/ b. $1.58/ c. $1.56/ d. $1.52/
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