they are connected questions

As an avid reader of business periodicals with an analytical turn of mind, you believe that the Euro is likely to rise in value against the dollar over the next 3 months. The Euro is currently trading in the spot market at $2/ and 3-month calls on Euros with a strike (or exercise) price of $2.25/ are currently selling for $.10. Acting on your belief about the direction of movement of Euro, you are willing to make a $200 investment in call options. Required What currency would be underlying your call options contract and what would be the size of your a) contract? b) What would be your pay off, profit or loss, and the rate of return on your investment if the spot rate at the end of 3 months turns out to be: $1.50/ (i) $2.70/ (ii) Problem 4 (Speculation) Refer to the information in problem 3 above. Suppose instead of investing the $200 in calls on Euros, you decide to invest the $200 for 2 months directly in Euros at the current spot exchange rate $2/E. Required a) What will be your profit and the rate of return on your investment if the spot at the end of 2 months turns out to be: $1.50/ (i) (ii) $2.70/ b) Comparing your answer in part (a) of this problem to your answer in part (b) of problem 3, what conclusion can you draw about making direct speculative investments in a currency versus an equal investment in call options on that currency