Suppose that the euro call option trades at 005 the strike, Ask an Expert

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Suppose that the EURO Call option trades at $0.05. The strike price of option is $0.9200 and current spot rate is $0.9203. A Euro forward contract which expires at the same time with option is at $0.9195. Employ this information to find out which one of the following isn't a correct statement.

Time value of the option is $0.0497

US dollar interest rate is lower than Euro interest rate

Intrinsic value of the option is $0.03

The call option price is expected to increase if USD interest rate increases

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91145593

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