1. A NZD put option with an exercise price of USD 0.65/NZD costs USD 0.05. If the current spot rate is USD 0.63/NZD, how much is the time value?
USD 0.07
$0
USD 0.03
USD 0.05
2. The following information was gathered from the April 6, 20X7 WSJ:
Actual exchange rate = MYR 4.85/EUR
If the implied PPP exchange rate using the VL handbag is MYR 4.70/EUR. Calculate the over- or under-valuation of the MYR. [Malaysia ringgit = MYR]
A +3.1915%
B -3.093%
C +3.093%
D -3.1915%