Explore BrainMass

Explore BrainMass

    Currency Derivatives and List of Factors

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    List the factors that affect currency call option premiums and briefly explain the relationship that exists for each. Do you think an at-the-money call option in euros has a higher or lower premium than an at-the-money call option in British pounds (assuming the expiration date and the total dollarvalue represented by each option are the same for both options)?

    © BrainMass Inc. brainmass.com June 3, 2020, 9:05 pm ad1c9bdddf

    Solution Preview

    These factors are listed below:

    ?The higher the existing spot rate relative to the strike price, the greater is the call ...

    Solution Summary

    This posting provides the answers to the student's questions.