The following options are held by Frances plc at their expiry date
A call option on £500,000 in exchange for US$ at an exercise price of £1 = $1.90.
The exchange rate at the expiry date is £1 = $1.95
A put option on £400,000 in exchange for Singapore $ at an exercise price of £1=$2.90
The exchange rate at the expiry date is £1 =$2.95
Which one of the following combinations (exercise/lapse) should be undertaken by the company
Call Put
A. Exercise Lapse
B. Exercise Exercise
C. Lapse Exercise
D. Lapse Lapse
This question is quite confusing. I know the answer is A but I don't understand which currency is the home country.
ACCA exam results — Are you ready?Chat about it >>