1. Speculating with currency options. When should a speculator purchase a call option on Australian dollars? When should a speculator purchase a put option on Australian dollars?
2. Currency call option premiums. List the factors that affect currency call option premiums and briefly explain the relationship that exists for each. Do you think an at-the-money call option in euros has a higher or lower premium than an at-the-money call option on dollars (assuming the expiration date and the total dollar value represented by each option are the same for both options)?