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Suppose the current exchange rate is $1.82 divided by pound$1.82/£?, the interest rate in the United States is 5.27%?, the interest rate in the United Kingdom is 4.02%?, and the volatility of the? $/£ exchange rate is 10.7%. Use the? Black-Scholes formula to determine the price of a? six-month European call option on the British pound with a strike price of $ 1.82 divided by pound $1.82/£.

The corresponding forward exchange rate is ?$ ? /£. ?(Round to four decimal? places.)

Using the? Black-Scholes formula d 1 is ? while N1 is? (Round to four decimal? places.)

Using the? Black-Scholes formula d 2 is? while N2 is? ?(Round to four decimal? places.)

The price of the call is $ ? /pound£. (Round to four decimal? places.)

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Financial Management, Finance

Category:- Financial Management
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