A pound call option with a strike price of 157 per pound is


A pound call option with a strike price of $1.57 per pound is priced (i.e. the option premium) at $0.03 per pound. the spot price is 1.56 per pound.

a. what is the intrinsic value of the option?

b. what is the breakeven spot exchange rate?

c. what is the profit or loss for the buyer of the option?

d. what is the profit or loss for the seller of the option?

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Financial Management: A pound call option with a strike price of 157 per pound is
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