Question 3 (25 marks) The current exchange rate of HKD (Hong Kong dollar) to CAD (Canadian dollar) is HKD6.2 per CAD. The information of a call option on CAD is shown in the table below. Type of option Time to maturity Strike Price Premium per CAD European Calle 3 months HKD6.40 HKD0.104 Pioneer Trading Limited (Pioneer) buys 300,000 shares of the call option. A+ Determine Pioneer's potential maximum gain? Explain. (4 marks) B. Determine Pioneer's potential maximum loss? Explain. Maximum loss = premium paid (4 marks) e C. Calculate Pioneer's breakeven exchange rate of HKD per CAD for the option investment. (6 marks) le D. Is the call option in-the-money, out-of-the-money or at-the-money if the market exchange rate is HKD6.45 per CAD? Explain. (5 marks) E. Calculate Pioneer's profit/loss in HKD when the market exchange rate is HKD6.8 per CAD. (6 marks)