The current exchange rate of dollars to euros is $18=e11. The risk free rate for dollars is ru = 3%. The risk free rate for euros is re = 4%.
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5.1. The current exchange rate of dollars to euros is $18=e11.
The risk free rate for dollars is ru = 3%.
The risk free rate for euros is re = 4%.
The dollar denominated price of an option to purchase e22 for $32 in six months is
$5:09.
(a) Determine the euro denominated price of a put option to sell $22 in six months using
the given strike. (Hint: the strike comes from the statement e22 for $32.)
(b) Determine the euro denominated price of a put option to sell $33 in six months using
the given strike.
(c) Determine the euro denominated price of a call option to buy $33 in six months using
the given strike.
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