How the value of a European put option for £1 will change if the current exchange rate will instantly increase from $1.4/£ to $1.5/£?
A) Increase by $0.1.
B) Increase by an amount that cannot be determined based on the available information.
C) Decrease by $0.1.
D) Decrease by an amount that cannot be determined based on the available information.

Question

Quizplus · Accepted Answer

The value of a European put option depends on various factors including the strike price, time to expiration, and volatility. Without knowing these details, the exact change in value due to the exchange rate increase cannot be determined.

How the Value of a European Put Option for £1