Consider a European call option on 62,500 with an exercise price of $1.50/. You pay an option premium of $0.10/ for the call option today.

a. If the $- spot exchange rate is $1.62/ on the contract expiration date, would you exercise the call option (buy at the exercise price at expiration)? What would be the option payoff and profit?

b. If the $- spot exchange rate is $1.45/ on the contract expiration date, would you exercise the call option? What would be the option payoff and profit?

c. At what $- spot exchange rate at expiration would you break-even (profit=0)?

d. Draw a profit profile of buying the call option.