Chapter 02 · Section 2.1
Fall In Exchange Rates
Suppose that Victor expected a strong fall in the exchange rate.
What kind of option would he purchase?
a) Call options.
b) Put options
c) Calls or puts
A DM call option gives the holder the right to buy a certain quantity of DM at a specified rate (exercise price) quoted on US$.
A DM put option gives the holder theright to sell a certain quantity of DM at a specified rate (exercise price) quoted on US$.