1.
Six-month call options with strike
prices of $35 and $40 cost $6 and $4, respectively.

(i)
What is the maximum gain when a bull
spread is created from the calls?

_ _ _ _ _ _

(ii)
What is the maximum loss when a bull
spread is created from the calls?

_ _ _ _ _ _

(iii)
What is the maximum gain when a bear
spread is created from the calls?

_ _ _ _ _
_

(iv)
What is the maximum loss when a bear
spread is created from the calls?

_ _ _ _ _
_

2.
Three-month European put options with
strike prices of $50, $55, and $60 cost $2, $4, and $7, respectively.

(i)
What is the maximum gain when a
butterfly spread is created from the put options? _ _ _ _ _ _

(ii)
What is the maximum loss when a
butterfly spread is created from the put options? _ _ _ _ _ _

For what two values of the stock price in three
months does the holder of the butterfly spread breakeven with a profit of zero?
_ _ _ _ _ _ _ and _ _ _ _ _ _ _