Question
The current spot exchange rate is $1.60 = 1.00; The three-month US dollar interest rate is 2%. Consider a three-month American call option on 62,500
The current spot exchange rate is $1.60 = 1.00; The three-month US dollar interest rate is 2%. Consider a three-month American call option on 62,500 with a strike price of $1.50 = 1.00. What is the least that this option should sell for?
A)$0.1 62,500 = $6,250
B)$6,250/1.6 = $3,906
C)$1.6062,500 = $96,875
D)$1.5062,500 = $93,750
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Analysis for Financial Management
Authors: Robert c. Higgins
8th edition
73041807, 73041803, 978-0073041803
