Suppose the UK investor Adam is trying to import 10,000 worth of steel from US after 6 months to use it as his raw material to produce cars. Now the exchange rate is 1/$. This UK investor Adam wants to hedge against the depreciating after 6 months. Therefore, he bought an American call option maturing after 6 months by paying 30 option premium. During this 6 months period, the exchange rate has been fluctuating between 0.95/$ and 1.07/$. The interest rate in the US has been 2% consistently throughout the entire 6 months period.

1. (A) What is the minimum and maximum profits that Adam can earn as this option owner? (Answer in terms of ) Show all your work. [20%]
2. (B) According to the interest parity condition, what can be inferred (i.e., what is the actual % figure) about the UK interest rate during the period when Adam was able to make maximum profit from his option? Show all your work. [5%]