A speculator has purchased United States dollar put options, with an exercise price of A$1.30 and a premium of A$0.05 per unit.

(a) Calculate the break-even price. (1 mark)

(b) Calculate the profit or loss of the option for the speculator if the spot rate at the time the speculator considers exercising the options is : (1) A$1.20 (2) A$1.28 (3) A$1.34. (6 marks)

(c) What is the maximum profit and maximum loss for the speculator? (2 marks)