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Uncertainty and Option Premiums. This morning, a Canadian dollar call option contract has a $.71 strike price, a premium of $.02, and expiration date of one month from now. This afternoon, news about international economic conditions increased the level of uncertainty surrounding the Canadian dollar. However, the spot rate of the Canadian dollar was still $.71. Would the premium of the call option contract be higher than, lower than, or equal to $.02 this afternoon? Explain.

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Financial Management, Finance

Category:- Financial Management
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