A call option on Australian dollars has a strike (exercise) price of $.56. The present exchange rate is $.59. This call option can be referred to as:
A) in the money.
B) out of the money.
C) at the money.
D) at a discount.

Question

Quizplus · Accepted Answer

A call option is "in the money" when the current exchange rate is above the strike price. Here, the exchange rate ($.59) is higher than the strike price ($.56), making the option in the money.

A Call Option on Australian Dollars Has a Strike (Exercise)