FCO Questions on the series 7 exam

An FCO question for the series 7 exam

A British pound 155 call covering 12,500 pounds has a current premium of 2.50 and the British pound is currently quoted at 149.27. How much would a person wishing to purchase the option pay ?

A) $149.27
B) $3,125
C) $31.25
D) $312.50


To determine the premium take the quote of 2.50 and move the decimal two places to the left .025 and multiply it by the amount of currency covered by the contract = .025 X 12,500 = $312.50.

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