2. The U.S. six-month interest rate (unannualized) is 2.85%. The Denmark six-month interest rate (unannualized) is 1.20%. There are six-month European call options and put options available for Danish krone (DKK). Both options have the same premium of $0.0003/DKK and a strike price of $0.1425/DKK. The spot rate of the Danish krone (DKK) is $0.1400/DKK. Assume that you believe in International Fisher Effect (IFE).

a. Forecast the dollar amount of your profit or loss from buying a 6-month European put option contract specifying DKK1,000,000. Round the intermediate calculations to 4 decimal places and final answer to 2 decimal places.

b. Forecast the USD paid by A&M company which uses the call option to hedge against its 6 month payables of DKK1,000,000. Round the intermediate calculations to 4 decimal places and final answer to 2 decimal places.