题目内容

A foreign currency option is an agreement between a holder (corporation) and a writer (commercial bank) giving the holder the right to buy or sell a certain amount of foreign currency at any time through some specified date.

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An option whose exercise price is equal to the spot rate is said to be .

A. in-the-money
B. at-the-money
C. out-of-the-money
D. on-the-spot

Assume the following: (1) the interest rate on 6-month treasury bills is 8% per annum in the United Kingdom and 4% per annum in the United States; (2) today's spot price of the pound is $1.50, while the 6-month forward price of the pound is $1.485.By investing in U.K. treasury bills rather than U.S. treasury bills, and not covering exchange rate risk, U.S. investors earn an extra return of .

A. 4% per year, 1% for the 6 months
B. 4% per year, 2% for the 6 months
C. 2% per year, 0.5% for the 6 months
D. 2% per year, 1% for the 6 months

Consider the following information to answer question 11 – 13.Assume the following: (1) the interest rate on 6-month treasury bills is 8% per annum in the United Kingdom and 4% per annum in the United States; (2) today's spot price of the pound is $1.50, while the 6-month forward price of the pound is $1.485By investing in U.K. treasury bills rather than U.S. treasury bills, and not covering exchange rate risk, U.S. investors earn an extra return of .

A. 4% per year, 1% for the 6 months
B. 4% per year, 2% for the 6 months
C. 2% per year, 0.5% for the 6 months
D. 2% per year, 1% for the 6 months

If U.S. investors cover their exchange rate risk, the extra return for the 6 months on the U.K. treasury bills is .

A. 1.0%
B. 1.5%
C. 2.0%
D. 2.5%