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5. On 1 January Investor A writes a European call option on Rugby plc stock with strike price 8.00 and maturity date 31 March. Shares

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5. On 1 January Investor A writes a European call option on Rugby plc stock with strike price 8.00 and maturity date 31 March. Shares in Rugby plc are trading at 7.50 on 1 January. Rugby plc is not expected to pay a dividend in the foreseeable future. On 31 March, explain what the minimum and maximum of investor A's potential payoff is and whether the option is exercised in each case

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