7. (15 points) Based on their belief that the U.S. dollar (USD) may depreciate significantly against the Mexican peso (MXN), a currency speculator in California wants to take a position that will be profitable in the case that the value of the dollar will plummet against the peso in the upcoming quarter. The current spot rate is 21.20 pesos per one dollar. The trader considers buying one of the following options on the Mexican peso: Option Put on peso Call on peso Strike Price $0.048 per peso $0.048 per peso Premium $0.00150 per peso $0.00025per peso (a) If only able to buy options (and not write options) should the trader buy a put on peso or a call on peso? [notice that the price in the table are quoted in terms of dollars per one peso] (b) Using your answer from part (a), what would be the trader's gross profit and net profit (excluding or including premiums) if the spot rate at the time of expiration is 22.0 pesos per on dollar? (each option is for one million peso) (c) Using your answer from part (a), what would be the trader's gross profit and net profit (excluding or including premiums) if the spot rate at the time of expiration is 20.4 pesos per on dollar