1. A trader buys a strangle on a stock by buying one European call option with strike price $55 for $3 and buying one European put option with strike price $45 for $2. The trader holds his position until maturity. For what stock price(s) at maturity, does the trader break even? (Profit equals zero.)
A. $50
B. $45 and $55
C. $43 and $58
D. $40 and $60
E. $38 and $63
2. The following is a list of prices for zero-coupon bonds of various maturities. Calculate the spot rates and the implied sequence of forward rates.
1. 943.40
2. 898.47
3. 847.62
4. 792.16