The value of an option is stated to be the sum of its intrinsic value and its time value. Explain what is meant by these terms.
Answer to relevant QuestionsFrom the point of view of a borrowing corporation, what are credit and repricing risks? Explain the meaning and probable significance for international business of the following contract specifications: • Specific-sized contract. • Standard method of stating exchange rates. • Standard maturity date. ...What are the major differences between short-term and long-term forecasts for a fixed exchange rate versus a floating exchange rate? Explain how the asset market approach can be used to forecast future spot exchange rates. How does the asset market approach differ from the BOP approach to forecasting? Define the following terms: a. Hedging. b. Currency risk.
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