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You are domiciled in Australia and wish to purchase a put option on USD.
The current exchange rate is AUD1=USD0.7900.
You purchase a 6-month put option on USD1,000,000 and use the Garman-Kohlhagen model to price the option. The inputs for your model are as follows:
Strike rate: AUD1 = USD0.7900
Interest rate base currency: 4% per annum continuously compounded
Interest rate terms currency: 2.5% per annum continuously compounded
Volatility of the exchange rate: 10% per annum
The premium for the put option is AUDAnswer.
The nearest cent and do not include a comma in your answer.
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