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Did the intervention effort by the Thai government constitute direct or indirect 



1. Impact of Information on Currency Option Premiums. As of 10:00 a.m., the premium on a specific one-year call option on British pounds is $.04. Assume that the Bank of England had not been intervening in the foreign exchange markets in the last several months. However, it announces at 10:01 a.m. that it will begin to frequently intervene in the foreign exchange market in order to reduce fluctuations in the pound- value against the dollar over the next year, but it will not attempt to push the pound- value higher or lower than what is dictated by market forces. Also, the Bank of England has no plans to affect economic conditions with this intervention. Most participants who trade currency options did not anticipate this announcement. When they heard the announcement, they expected that the intervention will be successful in achieving its goal. Will this announcement cause the premium on the one-year call option on British pounds to increase, decrease, or to be unaffected? Explain. 

2.	Did the intervention effort by the Thai government constitute direct or indirect intervention? Explain. 




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