Which of the following will increase the value (i.e. price or premium) of a call option? A decrease in the exercise price. An decrease in volatility A decrease in time to expiration. Red Bike, Inc., a U.S. company, produces bikes and has no international business. Its major competitors import most of their bikes from Mexico and then sell them out of retail stores in the United States. How will Red Bike, Inc., be affected if the Mexican peso strengthens over time? Red Bike is expected to be negatively affected by a strong Mexican peso. Red Bike is expected to be favorably affected by a strong Mexican peso. Red Bike is a local company and therefore, will not be affected by a strong Mexican peso. If you expect the euro to depreciate, for speculative purposes, your best strategy would be: Buy a euro put option Buy a euro call option Buy a pound put option Sell a euro put option You are looking at a put option on the pound in which the underlying (i.e. the pound) is at $1.218 per pound at expiration, the options are on 10,000 pounds, the exercise price is $1.105 per pound, and the option premium was $0.02 per pound when the option was purchased. What is the profit at expiration of this option for the option holder? Profit is -$200. Profit is -$1,200 Profit is $1,000 Profit is $800