The spot price of the market index is $900. The annual rate of interest on treasuries is 4.8% (0.4% per month). After 3 months the market index is priced at $920. An investor has a long call option on the index at a strike price of $930
What profit or loss will the writer of the call option earn if the option premium is $2.00?
A)
$2.00 gain
B)
$2.00 loss
C)
$2.02 gain
D)
$2.02 loss
Answer:
C
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As long as the flow of currencies is ________, the exchange rate can remain ________
A) out of balance; constant B) equal; in flux C) there is no relationship between the two D) equal; constant
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