3. (10 points) A US-based speculator is considering the purchase of a three-month Japanese yen put option on 1,000,000, with a strike price of 97 cents per 100. The option is American-style, with a premium of 2 cents per 100. The current spot exchange rate is 98 cents per 100 and the three-month forward exchange rate is 99 cents per 100. (a) (2 points) Suppose the speculator decides to purchase this contract. Does this decision indicate that the speculator holds a bullish or bearish View on the Japanese yen against the US dollar? (b) (2 points) What are the current intrinsic value and time value of the option contract? (c) (2 points) If the speculator holds the contract to expiration, determine his total prot/loss if the spot price of the yen becomes 94 cents per 100 in three months. (d) (4 points) If the speculator holds the contract to expiration, graph the put option's cash ow (i.e. prot/loss) schedule in US cents per 100 purchased. Label on the graph the premium, strike price, and the break-even point of the option. Please also label the axes of the graph