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Question
An American firm has just bought merchandise from a British firm for 50,000 on terms of 90-day payment. This firm has purchased a 3-month call option on 50,000 pounds at a strike price of $1.7 per pound and a premium cost of $0.02 per pound. On the day the option matures, the spot exchange rate is $1.8 per pound. What will be the cost of the option in U.S. dollars?
a. $1000
b. $10
c. $85,000
d. $5,000
Answer
This answer is hidden. It contains 1 characters.
Related questions
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