Answer:
i) Investor should buy a call option as expected spot price on SGD after 90 days is 0.7 which less than the strike price 0.65 under call option.
II) Break-even price on option selected
Strike price under call option 0.65000
Add : Premium <u>0.00046</u>
Break even price <u> 0.65046</u>
iii) Actual spot rate after 90 days 0.70000
Less: Strike price under call option <u>0.65000</u>
Gross profit 0.05000
Less: Call option premium <u>0.00046
</u>
Net profit <u>0.04954</u>
iv) Actual spot rate after 90 days 0.80000
Less: Strike price under call option <u>0.65000</u>
Gross profit 0.15000
Less: Call option premium <u>0.00046</u>
Net Profit <u>0.14954</u>