What is garman-kolhagen model of foreign currency option

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Reference no: EM13897503

1. Explain intuitively how foreign currency options can be replicated with portfolios of borrowing and lending in the two currencies.

2. Why do the formulas for option prices not depend explicitly on the expected rate of appreciation of one currency relative to another currency?

3. What is the Garman-Kolhagen model of foreign currency option pricing?

4. What is the delta of an option? Why is it useful?

5. What does it mean for a portfolio of options to be delta neutral?

Reference no: EM13897503

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