Stock Valuation Utilizing The Smp Model
Now suppose the actual exchange rate on specified day for EUR/USD is 1.255 the proprietor can physical exercise the Choice to sell EUR 1,000,000 at 1.338 under the choice agreement & purchase it back again in Place market at one.255. This would outcome in a profit to the proprietor. (one.334-1.255) x one,000,000 = 79000 USD in pro…