Question: Need detailed answer please , thank you 2 The current spot exchange rate is $1.25 1.00 and the three-month forward rate is $1.30 = 1.00.

Need detailed answer please , thank you

2 The current spot exchange rate is $1.25 1.00 and the three-month forward rate is $1.30 = 1.00. Consider a three-month American call option on 62,500 with a strike price of $1.20 = 1.00. If you pay an option premium of $5,000 to buy this call, at what exchange rate will you break-even? a) $1.28= 1.00

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