* Problem 7.11 Calandra Panagakos at CIBC Calandra Panagakos works for CIBC Currency Funds in Toronto, Calandra is something of a contrarian -- as opposed to most of the forecasts, she believes the Canadian dollar (CS) will appreciate versus the U.S. dollar over the coming 90 days. The current spot rate is $0.6750/CS. Calandra may choose between the following options on Option Put on C$ Call on C$ Strike Price $0.7000 $0.7000 Premium $0.00003/S$ $0.00049/S$ a. Should Calandra buy a put on Canadian dollars or a call on Canadian dollars? b. What is Calandma's breakeven price on the option purchased in part (a)? c. Using your answer from part (), what is Calandra's gross profit and net profit (including premium) if the spot rate at the end of 90 days is indeed $0.7600? d. Using your answer from part (a), what is Calandra's gross profit and net profit (including premium) if the spot rate at the end of 90 days is $0.8250? Assumptions Values Current spot rate (US/Canadian dollar) S0.6750 Days to maturity 90 Option choices on the Canadian dollar: Strike price (US/Canadian dollar) Premium (USS/Canadian dollar) Call option S0.7000 S0.00049 Put option S0.7000 S0.0003