A pound call option with a strike price of 14 per euro is, Financial Management

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A pound call option with a strike price of 14 per euro is

A pound call option with a strike price of $1.4 per euro is priced (i.e., the option premium) is at $0.06 per euro. The spot price is $1.35 per pound. a) What is the intrinsic value of the option? b) What is the breakeven spot exchange rate? c) What is the profit or loss for the buyer of this call option? d) What is the profit or loss for the seller of this call option?

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