1.Today is the expiration day of a put option on the euro that you purchased three months ago when the spot rate was $1.1360/. The strike rate on the option is $1.1340/ and the premium was $0.0340/.

a.What were the intrinsic value and the time value of the call at the time of purchase?

b.If today's spot rate is $1.1320/, would you exercise? How much would your payoff be (payoff is value of option position at expiration)? How much would your profit/loss be?

c.Repeat part b above assuming today's spot rate is $1.1490/.

d.At what expiration spot rate would you break even?

2.Today is the expiration day of a call option on the Swiss franc that you purchased three months ago when the spot rate was $1.0680/SF. The strike rate on the option is $1.0690/SF and the premium was $0.0300/SF.

a.What were the intrinsic value and the time value of the put at the time of purchase?

b.If today's spot rate is $1.0603/SF, would you exercise? How much would your payoff be? How much would your profit/loss be?

c.Repeat part b under the assumption that today's spot rate is $1.0880/SF.

d.At what expiration spot rate would you break even?