1. Compare the difference between traditional and nontraditional life insurance products by explaining the financial disintermediary. Explain thoroughly please.
2. Given a stock price of $18, an exercise price of $20, and an interest rate of 7%, what are the intrinsic values which will occur for a one-period binomial option model if the stock price goes up to $23 or down to $16.
3. If a dealer bought 10,000 shares of stock at $25 per share, then sold 5,000 of them at $25.50 per share and 5,000 at $25.25 per share, (a) what is the dealer’s gross profit? And (b) what is the dealer’s average bid-ask spread?