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Use the following information to determine the probability distribution of net gains per unit from purchasing a call option on British pounds. Spot rate of
Use the following information to determine the probability distribution of net gains per unit from purchasing a call option on British pounds.
Spot rate of the British pound is $1.45
Premium on the British pound option is $0.04 per unit.
Exercise price of a British pound option is $1.46
Your expectation of the British pound spot rate prior to the expiration of the option is:
Possible Outcome for Future Spot Rate Probability
$1.48 30%
$1.49 40%
$1.52 30%
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