The existing spot rate of the Canadian dollar is $.82. The premium on a Canadian dollar call option is $.04. The exercise price is $.81. The option will be exercised on the expiration date if at all. If the spot rate on the expiration date is $.87, the profit as a percent of the initial investment (the premium paid) is:
A)0 percent.
B)25 percent.
C)50 percent.
D)150 percent.
E)none of the above

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The Answer of The existing spot rate of the Canadian dollar is $.82. The premium on a Canadian dollar call option is $.04. The exercise price is $.81. The option will be exercised on the expiration date if at all. If the spot rate on the expiration date is $.87, the profit as a percent of the initial investment (the premium paid) is:
A)0 percent.
B)25 percent.
C)50 percent.
D)150 percent.
E)none of the above

The Existing Spot Rate of the Canadian Dollar Is