The current spot exchange rate is exist1.55 = euro 1.00 and the three-month forward rate is exist1.60 = euro 1.00. Consider a three-month American call (put) option on euro 62, 500 with a strike price of exist1.50 - euro 1.00. The premium of this American call (put) option is exist0.08 (0.03).
(1) Calculate the intrinsic value and time value of the put option.
(2) At what exchange rate will you break even if you purchase this put option?