Currency Options

Recently currency options are the new popular form of hedging. Use the Internet to locate a currency options calculator. Use the information in the chart below and calculate a currency option.

AmountDomestic CurrencyUSDForeign CurrencyEUROption TypeCallInterest Rate5%Spot price$1.57 centsSpot Date6/12/2012Principle200,000Strike PriceCreate this priceExpiration Date7/12/2012Volatility2%

Research on the Internet and the Rasmussen research databases and write a 1 to 2 page paper that:

  • Explains the option you calculated.
  • Describes how hedging can be of advantage or disadvantage to the option.
  • Use APA formatting for any citations and reference page.

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