Problem #6: You are given: (i) The spot exchange rate for dollars to pounds is 1

Subject:FinancePrice:2.86 Bought15

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Problem #6: You are given: (i) The spot exchange rate for dollars to pounds is 1.76 $/£. (ii) The continuously compounded risk-free rate for dollars is 9%. (iii) The continuously compounded risk-free rate for pounds is 5%. A 7-month European put option allows selling £1 at the rate of $1.44 I£. A 7-month dollar denominated call option with the same strike costs $1.19. Determine the premium of the 7-month dollar denominated put option. answer correct to 2 decimals Problem #6: Correct Answer: 0.85 Your Mark: 0/2