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2.12.5 Points) The US, three-month interest rate (unannualized) is 1%. The Canadian three-month interest rate (unannualized) is 4%. A put option with a three- month

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2.12.5 Points) The US, three-month interest rate (unannualized) is 1%. The Canadian three-month interest rate (unannualized) is 4%. A put option with a three- month expiration date on Canadian dollars is available for a premium of $0.02 and a strike price of $0.62. The spot rate of the Canadian dollar is $0.65. Assume that you believe in International Fisher Effect (IFE). Forecast the dollar amount of your profit or loss from buying a put option contract specifying C$100,000. (1.25 points) Forecasr the USD received by A&M company which uses the put option to hedge against its 3 month receivables of Cs 100,000. (1.25 points) a. b. ANS: Please labe I a/b in your response to the two sub-questions respectively

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