The spot rate of the New Zealand dollar is $.78. A call option on New Zealand dollars with a 1-year expiration date has an exercise price of $.79 and a premium of $.04. A put option on New Zealand dollars at the money with a 1-year expiration date has a premium of $.04. You expect that the New Zealand dollars spot rate will decline over time and will be $.72 in 1 year.

a. Today, Dawn purchased call options on New Zealand dollars with a 1-year expiration date. Estimate the profit or loss per unit at the end of 1 year. [Assume that the options would be exercised on the expiration date or not at all.]

b. Today, Mark sold put options on New Zealand dollars at the money with a 1-year expiration date. Estimate the profit or loss per unit for Mark at the end of 1 year. [Assume that the options would be exercised on the expiration date or not at all.]

c. Please show a combination strategy and their break even points with the information given in the question.