1a) Jimmy Pools bought a 90- day American put option contract on 50,000 two days ago when the spot rate was $1.530/. We have the following information:

Current spot rate: $1.540/,

90-day forward rate: $1.550/,

The put option has a strike price of $1.510/ and a premium of 1%.

If the option is exercised today, how much is the gain or loss?

1b) You are a U.S.-based treasurer with $1,000,000 to invest. The dollar-euro exchange rate is quoted as $1.110 = 1.00 and the dollar-pound exchange rate is quoted at $1.554 = 1.00. If a bank quotes you a cross rate of 1.00 = 1.40, how much money can an astute trader make?