Jane sold a CALL option on British pounds for $0.04 per unit. The strike price was $1.80. Assume there are 31,250 units in a British pound option.

a) The spot rate at the time the pound option was exercised was $1.59. i. Will the option be exercised? Explain with reasons. ii. What will be Janes net profit/loss on the option? b) The spot rate at the time the pound option was exercised was $1.95. i. Will the option be exercised? Explain with reasons. ii. What will be Janes net profit/loss on the option?