$(10$ pts$)$ Alice Duever purchased a put option on British pounds for $$\mathrm{.}04$ per unit. The strike

price was $$1\mathrm{.}80,$ and the spotrate at the time the pound option was exercised was $$1\mathrm{.}59.$

Assume there are $31,250$ units in a British pound option. What was Alice's net profit on the

option?

You are the treasurer ofa U$.$S$.$ multinational corporation with operations all over the world.

One subsidiary is located in Papua New Guinea and uses the local currency, the kina, which

was at $3$kin$\frac{a}{\text{\$}}$ on January$1,2012.(10$ pts$)$ If the inflation rate in the U$.$S$.$ was $5\%$ and the