1. You want to purchase a 6-month box spread with strike prices of $35 and $42 when the risk-free interest rate is 5%. What option positions will you enter and what is the appropriate total price for the position?
2. A call option with 10 months to expiration has a strike of $90 when the spot price is $88. Also, the stock has a volatility of 15% and pays dividends at a rate of 3%. The risk-free rate is 4%. What is the probability of the option expiring in the money?
3. What are some expenses that have impacted institutions' capital budget today that did not 10 to 15 years ago and what are some typical expenses associated with the captial budget?