The call premium per British pound on March 1 is ($0.04,) the expiration date is September 19,

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The call premium per British pound on March 1 is $$0.04,$ the expiration date is September 19, and the strike price is $$1.80.$ A speculator believes that the spot rate for the pound will rise to $$1.92$ by September 19.

(a) If the speculator’s expectations are correct, what would be her dollar profit from speculating two pound call options (£62,500)?

(b) If the spot rate were $$1.76$ per pound when the option expired, would the speculator exercise the options? What would be her loss from this speculation?

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