A hk call option with an exercise price of 020hk costs 004

Question

1. A HK$ call option with an exercise price of $0.20/HK$ costs $0.04. Calculate the breakeven price.

a) $0.04/US$

b) $0.24/US$

c) $0.16/US$

d) $0.20/HK$

2. Currency options are customized to fit the needs (contract size, exercise price, expiration date) of the banks’ customers. These options are used for hedging purposes.

a) Over-the-counter

b) New York Stock Exchange

c) Exchange-traded