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What is the lower bound of a European foreign currency call if the spot rate is $2.25, the domestic interest rate is 5.5 percent, the
What is the lower bound of a European foreign currency call if the spot rate is $2.25, the domestic interest rate is 5.5 percent, the foreign interest rate is 6.2 percent, the option expires in three months, and the exercise price is $2.20? (The interest rates are continuously compounded.)
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