Assume That the Dollar-Euro Spot Rate Is $1 $F_{T}=S_{t} e^{\left(r_{\$}-r_{€}\right)^{T}}$ = $128

Multiple Choice

Assume that the dollar-euro spot rate is $1.28 and the six-month forward rate is $F_{T}=S_{t} e^{\left(r_{\$}-r_{€}\right) ^{T}}$ = $1.28 $e ^{.01 \times .5}$ = $1.2864.The six-month U.S.dollar rate is 5 percent and the Eurodollar rate is 4 percent.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.