Assignment: Currency Options
Recently currency options are the new popular form of hedging. Use the Internet to locate a currency options calculator. Use the information in the chart below and calculate a currency option.
|
Detail
|
Amount
|
|
Domestic Currency
|
USD
|
|
Foreign Currency
|
EUR
|
|
Option Type
|
Call
|
|
Interest Rate
|
5%
|
|
Spot price
|
$1.57 cents
|
|
Spot Date
|
6/12/2012
|
|
Principle
|
200,000
|
|
Strike Price
|
Create this price
|
|
Expiration Date
|
7/12/2012
|
|
Volatility
|
2%
|
Research on the Internet and the Rasmussen research databases and write a 1 to 2 page paper that:
• Explains the option you calculated.
• Describes how hedging can be of advantage or disadvantage to the option.
• Use APA formatting for any citations and reference page.