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Please help. 2. (4 Points) The U.S. three-month interest rate (unannualized) is 3.5%. The...

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2. (4 Points) The U.S. three-month interest rate (unannualized) is 3.5%. The Canadian three-month interest rate (unannualized) is 1.5%. A call option with a three-month expiration date on Canadian dollars is available for a premium of $0.0200 and a strike price of $0.7300. The spot rate of the Canadian dollar is $0.7200. Assume that you believe in International Fisher Effect (IFE). a. Forecast the dollar amount of your profit or loss from buying a call option contract specifying C$100,000. (2 points) b. Forecast the USD paid by A&M company which uses the call option to hedge against its 3 month payables of C$ 100,000. (2 points) ANS: Please label a/b in your response to the two sub-questions respectively

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