The current spot exchange rate is 155 euro100 and the, Ask an Expert

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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 put option on €62,500 with a strike price of $1.50 = €1.00. Immediate exercise of this option will generate a profit of

A. $6,125

B. $6,125/(1+i$)3/12

C. negative profit, so exercise would not occur

D. $3,125

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92329782

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