Problem 3 Suppose you bought call options on the GBP. You paid CHF 10 for each contract. Each call option (contract) is on GBP 100. GBP 100 currently sell for CHF 127, and the option has a strike price of CHF 120 per GBP 100. a. Is the option out, at, or in the money? b. What is the option's exercise value? C. What is the option's time value? d. Graph the call option payoffs at expiration. f. Add to the graph the profits from this position. What is your potential profit from this position? g. What is your potential loss from this position? h. Determine the profit/loss if the GBP depreciates to CHF 123/ GBP 100. Will you exercise the option at this exchange rate? i. Determine the future spot exchange rate at which you will breakeven.