Option Strike Price Premium Put (US$/Singapore dollar) 0.6500 0.00003 Call (US$/Singapore dollar) 0.6500 0.00046

Cece Cao in Jakarta. Cece Cao trades currencies for Sumatra Funds in Jakarta. She focuses nearly all of her time and attention on the U.S. dollar/Singapore dollar ($/S$) cross rate. The current spot rate is $0.60000.6000 /S$. After considerable study, she has concluded that the Singapore dollar will appreciate versus the U.S. dollar in the coming 9090 days, probably to about $0.70020.7002 /S$ She has the following options on the Singapore dollar to choose from:.

a. Should Cece buy a put on Singapore dollars or a call on Singapore dollars?

b. What is Cece's breakeven price on the option purchased in part a ?

c. Using your answer from part a ,what is Cece's gross profit and net profit (including premium) if the spot rate at the end of 90 days is indeed $0.70020.7002 /S$?

d. Using your answer from part a , what is Cece's gross profit and net profit (including premium) if the spot rate at the end of 90 days is $0.80040.8004 /S$