Currently, the spot rate is $1.33/. As a trader, you believe that the British pound will depreciate significantly in the near future. You decide to speculate by buying a Decemberput option with a strike price of $1.35/ and a premium of$0.05/. Please answer the following questions:

1. Explain briefly why buying a put option makes sense in this case.

2. How much is the intrinsic value of the option? And how much is the time value?

3. Please fill in the blanks of the table below.

Spot rate at maturity in December	Exercise or not?	Net profit	Moneyness (ITM, ATM or OTM)
$1.20/
1.25
1.30
1.35
1.40
1.45