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1.(6 points) France Heinz works as a currency speculator for Fidelity & Co of London. Her latest speculative position is to profit from her expectation

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1.(6 points) France Heinz works as a currency speculator for Fidelity & Co of London. Her latest speculative position is to profit from her expectation that the U.S. dollar will rise significantly against the British Pound. The current spot rate is $1.20/. She must choose between the following 60-day options on the British Pound: Option Put on British pound Call on British Pound Strike Price $1.25/ $1.25/ Premium $0.003/ $0.046/ a. Should France buy a put-on British Pound or a call on British pound? b. What is France's breakeven price on the option purchased in part (a)? c. Using your answer from part (a), what is France's gross profit and net profit (including premium) if the spot rate at the end of 60 days is $1.40/? O

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