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When moving from valuing an option on a non-dividend paying stock to an option on a currency which of the following is true? The risk-free
When moving from valuing an option on a non-dividend paying stock to an option on a currency which of the following is true? The risk-free rate is replaced by the excess of the domestic risk-free rate over the foreign risk-free rate in all calculations The risk-free rate be replaced by the excess of the domestic risk-free rate over the foreign risk-free rate for discounting The formula for u changes The risk-free rate be replaced by the excess of the domestic risk-free rate over the foreign risk-free rate when p is calculated
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