Kizspy | Question: 37
(Choose 1 answer)
pjoven lan lom
The current spot exchange rate is $1.55 €1.00 and the three-month forward rate is $1.60 €1.00. Consider
a three-month American call option on €62,500 with a strike price of $1.50 €1.00. If you pay an option
premium of $5,000 to buy this call, at what exchange rate will you break-even?
A. $1.58 €1.00
B. $1.62 €1.00
C. $1.50 €1.00
D. $1.68 €1.00
