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Reference:
Opentuition Book
Example 3 (Currency Option) Page 99After calculating the Premium, we have to choose whether are we going to choose option or not.
In this question how did we decide to avail the option, if we are going to buy dollars then we should choose the lower rate rather than higher rate.? Kindly guide me on this that how do we decide at this point to make the selection between rates.?You must watch the lectures on this – I really cannot type them all out here and the lectures both explain and expand on the lecture notes. There is no point at all using the notes without the lectures.
The example you refer to is worked through in full in the lectures on this chapter.
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