2. Horst Schmidt is considering buying ten call options on Swiss franc on the Philadelphia Stock Exchange at a strike price of 54 cents per pound. The contract size is SF62, 500. The option will expire in three months. The premium is 2.0 cents per pound . Ignore the brokerage cost. The spot rate is currently 5.5400/5F and the three-month forward rate is $.5525 /SF . Horst Schmidt believes that the most likely range for the spot pound in three months will be a low of $.5000/5F to a high of $.6200/5F, but the most likely value will be S.5900 /SF . 1. Diagram the profit and loss position as perceived by Horst Schmidt. 2. Calculate what he would gain or lose at his expected range of future spot prices and at his expected future spot price. 3. Calculate and show on the diagram the breakeven future spot price. 3. Horst Schmidt is also considering speculating on the Swiss franc in the futures market rather than buying the call options. He could buy five futures contracts on the Swiss franc on the IMM with a maturity date three months hence. He can buy the contracts at a price of $.5530/5F. His margin requirements are 10% of the contract size. Given Horst Schmidt's expectations about the future spot rate for the Swiss franc, calculate his expected profit and loss position on these futures contracts. 4 . Given the same facts as in Question 2, Horst Schmidt has changed his expectation of the future spot rate of the Swiss franc. He now believes it will fall during the next three months to $.5100/5F, but the potential range would still be the same. He can purchase ten put options on the Philadelphia Stock Exchange at a strike price of 54 cents per Swiss franc, a contract size of SF62,500, an expiration date three months hence, and a premium of 1.0 cents per Deutschemark 1. Diagram the new profit and loss position as perceived by Horst Schmidt. 2. Calculate what he would gain or lose at his expected range of future spot prices and at his new expected future spot price. 3. Calculate and show on the diagram the breakeven future spot price. 5. Horst Schmidt is also considering using the futures market as an alternative to the put options. He could sell five futures contracts on the Swiss franc on the IMM with a three-month maturity, 10% margin, and a selling price of $.5530/5F. Given Horst Schmidt's new expectations about the future spot rate for the Swiss franc, calculate his expected profit and loss position and his return on investment on these futures contracts