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Draw the Tree for a Call Option on $20,000 with a Strike

Question 20

Multiple Choice

Draw the tree for a call option on $20,000 with a strike price of £10,000.The current exchange rate is £1.00 = $2.00 and in one period the dollar value of the pound will either double or be cut in half.The current interest rates are i$ = 3% and are i£ = 2%.


A) Draw the tree for a call option on $20,000 with a strike price of £10,000.The current exchange rate is £1.00 = $2.00 and in one period the dollar value of the pound will either double or be cut in half.The current interest rates are i<sub>$</sub> = 3% and are i<sub>£</sub> = 2%. A) B) C) both of the options D) none of the options
B) Draw the tree for a call option on $20,000 with a strike price of £10,000.The current exchange rate is £1.00 = $2.00 and in one period the dollar value of the pound will either double or be cut in half.The current interest rates are i<sub>$</sub> = 3% and are i<sub>£</sub> = 2%. A) B) C) both of the options D) none of the options
C) both of the options
D) none of the options

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