The current exchange rate is €1.25 = £1.00 and a British firm offers a French customer the choice of paying a £10,000 bill due in 90 days with either £10,000 or €12,500.
A) The seller has given the buyer an at-the-money put option on euro with a strike in pounds.
B) The seller has given the buyer an at-the-money put option on pounds with a strike in euro.
C) The seller has given the buyer an at-the-money call option on euro with a strike in pounds.
D) none of the options
Correct Answer:
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