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You purchase a 6-month call option on euro for a premium of $0.05 per unit, with an exercise price of $1.16; the option will not
You purchase a 6-month call option on euro for a premium of $0.05 per unit, with an exercise price of $1.16; the option will not be exercised until the expiration date, if at all. You borrowed the money for a premium of 8% continuous compunding rate. if the euro's market price. If the euro's market price on the expiratation date (t = 6/12) is $1.36, how much is your net profit/loss per unit in dollars and euros?
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