1. Which of the following are true regarding currency options?
a- Option premiums deteriorate at a decreasing rate as they approach maturity.
b- The majority of the option premium is lost in the final thirty days prior to expiration
c- A reader will find shorter maturities to be better values.
d- Two of the above
e- None of the above
2. The price of a European type call option must be equal to or_______
a- Greater than the present value of the spot price minus the present value of the exercise price.
b- Less than the present value of the spot price minus the present value of the exercise price.
c- Greater than the present value of the spot price minus the present value of the forward price.
d- Less than the present value of the spot price minus the present value of the forward price.
e- None of the above