Suppose the UK investor Adam trying to import 10,000 worth of steel from the US after 3 months to use it as his raw material to produce cars. Right now, the exchange rate is 1/1$. This UK investor Adam wants to hedge against the depreciating after 3 months so he bought a European call option maturing after 3 months by paying 150 option premium. Then after 3 months, indeed the depreciated so that the exchange rate became 0.98/1$. The interest rate in UK has been 2% consistently throughout the entire 3-month period.

1. What is Adams payoff as a European call option owner? (Answer in terms of ). Show all your work and explain. [7%]
2. According to the interest parity condition, what can be inferred (i.e. what is the actual % figure) about the US interest rate throughout the entire 3-month period? Show all your work and explain. [3%]