After consulting a FOREX trader, Mr. John, an American importer, purchased a Call option with a size of EUR 500,000 with a strike price of EUR/ USD= 1.1931. Its maturity is on 60 days and its premium is 2% of the option size. After two months, the market price altered into USD/EUR= 0.9075. The trader informed him that the option is at-the-money. Which of the followings justifies the statement of the FOREX trader? O a. The option has a ready market. O b. The strike price and the spot price are the same. O c The strike price is lower than spot price. Od. The strike price is greater than the spot price.

After consulting a FOREX trader, Mr. John, an American importer, purchased a Call option with a size of EUR 500,000 with a strike price of EUR/ USD= 1.1931. Its maturity is on 60 days and its premium is 2% of the option size. After two months, the market price altered into USD/EUR= 0.9075. The trader informed him that the option is at-the-money. Which of the followings justifies the statement of the FOREX trader? O a. The option has a ready market. O b. The strike price and the spot price are the same. O c The strike price is lower than spot price. Od. The strike price is greater than the spot price.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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