Consider a bond selling for $98 per $100 face value. A call option selling for $8 has an exercise price of $105. Answer the following questions about a covered call.
A. Determine the value of the position at expiration and the profit under the following outcomes:
i. The price of the bond at expiration is $1 10.
ii. The price of the bond at expiration is $88.
B. Determine the following:
i. The maximum profit
ii. The maximum loss
C. Determine the breakeven bond price at expiration.