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Q.2 (20 Marks) Mr. Saeed Othman works as Foreign Exchange Currency Dealer for SIB Currency Funds in Oman. Saeed is something of a contrarian-as opposed

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Q.2 (20 Marks) Mr. Saeed Othman works as Foreign Exchange Currency Dealer for SIB Currency Funds in Oman. Saeed is something of a contrarian-as opposed to most of the forecasts, he believes the Canadian dollar (C$) will appreciate versus the U.S. dollar over the coming 90 days. The current spot rate is $0.6750/C$. Saeed may choose between the following options on the Canadian dollar. Option Put on C$ Call on C$ Strike Price $0.7000 $0.7000 Premium $0.00003/S$ $0.00049/5$ a. Based on the assumptions, you are assigned to forecast either, Saeed should buy a put on Canadian dollars or a call on Canadian dollars? (5 Marks) b. Calculate the break-even price for Saeed, on the option he purchased in above mentioned Part (a) (5 Marks) C. Apply the answer from Part-(a) and estimate the gross profit and net profit (including premium) for Saeed, if the spot rate at the end of 90 days is indeed $0.7600 (5 Marks) d. Again using the answer from Part-(a), what would be the Saeed's gross profit and net profit (including premium) if the spot rate at the end of 90 days is $0.8250

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