OpenTuition.com Free resources for accountancy students
Free ACCA lectures and course notes | ACCA AAT FIA resources and forums | ACCA Global Community
ACCA P4 lectures Download P4 notes
November 28, 2015 at 4:26 am
sir plz tell me if examiner does not specify which strike price to use.and we have to decide.then how can i select strike price out of 3 as mentioned in questions.
John Moffat says
November 28, 2015 at 8:10 am
You cannot say which is the best strike price – you can only discuss them.
Different strike prices limit the worst that can happen, but the ‘better’ the limit the more expensive the option will be (the premium).
When we buy the option we do not know what is going to happen to the exchange rate – if it moves in our favour then we do not exercise and we still have to pay the premium.
You must be logged in to post a comment.
OpenTuition.com is dedicated to providing all accountancy students throughout the world with the resources they need to study for the major … Learn more