Calling All Profits. Consider an American call option on New Zealand dollars (NZ$) with a strike price of

$0.8100/NZ$ traded at a premium of $0.0192 per NZ$

and with an expiration date three months from now.

The option is for NZ$100,000.

a. Suppose that you have bought such a call option.

Plot your profit or loss on a graph should you exercise before maturity at a time when the NZ$ is traded spot at between $0.7000/NZ$ and $0.9200/

NZ$. Find the break-even exchange rate.

b. Repeat

(a) if you have sold such a call option.