What is value of the european put with same strike price

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Suppose that the current USD/EUR FX-rate is S = USD1.18/EUR, the i(US,1year) = 4%, and i(EUR,1year) = 1%.

1. Calculate the lower bound for the price of an European call option with strike price equal to USD 1.2/EUR and 1 year time to maturity.

2. Calculate the highest lower bound for the price of an American call option with strike price equal to USD 1.2/EUR and 1 year time to maturity.

3. Suppose that the European call is worth USD 0.1233. What is the value of the European put with the same strike price and maturity date?

Reference no: EM131886529

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