Assume That the Dollar-Euro Spot Rate Is $1

Multiple Choice

Assume that the dollar-euro spot rate is $1.28 and the six-month forward rate is .The six-month U.S.dollar rate is 5% and the Eurodollar rate is 4%.The minimum price that a six-month American call option with a striking price of $1.25 should sell for in a rational market is

A) 0 cents
B) 3.47 cents
C) 3.55 cents
D) 3 cents