Suppose I own a soccer ball producing firm in London England and I am selling 10,000 soccer balls in 90 days to the US for a price of $150,000.The current spot rate is $ 1.5 / . We are going to use the option market to hedge against unfavorable exchange rate movements.

You must show all work for full credit.

a) (5 points) Considering this transaction only, what do we mean by 'unfavorable' exchange rate movements?

b) (5 points) Suppose it costs me 90,000 to produce and transport the soccer balls, if the exchange rate in 90 days is the same as the current spot ($1.5/), what is my profit in terms of British pounds ()?