Calandra Panagakos works for CIBC Currency Funds in Toronto. Calandra is something of a contrarian-as opposed to most of the forecasts, she believes the Canadian dollar (C$) will appreciate versus the U.S $ over the coming 90 days. The current spot rate is $0.6750/C$. Calandra may choose between the following options on the Canadian dollar. Option Strike Price Premium Put on C$ Call on C$ $0.7000 $0.7000 $0.00003 $0.00049 Required:

(a) Advise whether Calandra Should buy a put on Canadian dollars or a call on Canadian dollars.

(b) Calculate Calandra's break-even price on the option purchased in part (a).

(c) If the spot rate at the end of 90 days is $0.7600, calculate the gross profit and net profit that Calandra would receive.

(d) If the spot rate at the end of 90 days is $0.8250, calculate the gross profit and net profit that Calandra would receive.