Option Call and Put - The spot rate of the Canadian dollar is $.77. A call option on Canadian dollars with a one-year expiration date has an exercise price of $.78 and a premium of $.04. A put option on Canadian dollars at the money with a one-year expiration date has a premium of $.03. You expect that the Canadian dollars spot rate will decline over time and will be $.71 in one year.

1. Today, Frederick purchased call options on Canadian dollars with a one-year expiration date. Estimate his profit or loss per unit at the end of one year. [Assume that the options would be exercised on the expiration date or not at all.]

2. Today, Mark sold put options on Canadian dollars at the money with a one-year expiration date. Estimate his profit or loss per unit at the end of one year. [Assume that the options would be exercised on the expiration date or not at all.]