Problem
1. You work for an investment banking firm in Amsterdam. A new sterling call option is about to open for trading which will allow its purchasers to pay euros and receive sterling. You are asked to predict the price or premium at which this new option contract will trade at the end of its first day on the market. What information do you need to make this prediction, and how would you use that information?
2. What factors would cause the premium or price of a 6-month sterling put option with a given strike price to rise from 1 cent to 3 cents?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.