AaB AaBBC AaBbc AaBBC AaBbCcDc A Heading 4 Heading 5 Heading 6 Heading 7 T Normal IN Paragraph Styles A put option on Canadian dollars with a strike price of Euro .63 is purchased by a speculator for a premium of Euro 0.05. If the Canadian dollar's spot rate is $.64 on the expiration date: Should the speculator exercise the option on this date or let the option expire? If yes, show via calculations the final outcome. 15 points 2. The inflation rate in the USA is 5 percent while the inflation rate in Japan is 10 %. The current exchange rate for the Japanese yen () is $0.0075. After supply and demand for the Japanese yen have adjusted in the manner suggested by purchasing power parity, the new exchange rate for the yen will be? Briefly explain the PPP theory, 15 points ORI 25