3 Questions to answer ASAP:

#1: Consider a call and a put on the same underlying stock. The call has an exercise price of $50 and costs $8. The put has an exercise price of $40 and costs $7. Generate a table for a short position in a strangle based on these two options. What is the worst outcome from selling the strangle? At what stock price or prices does the strangle have a zero profit? In what range of stock prices does the strangle produce maximum profit? What is the maximum profit?

#2: You hold the current editions ofTheWall Street JournalandThe Financial Times, the British answer to the WSJ.In the WSJ, you see that the dollar/pound 90-day forward exchange rate is $2 per pound. InThe Financial Times, the pound 90-day dollar/pound rate is .45 per U.S. dollar.Explain how you would trade to take advantage of these rates, assuming perfect markets.

#3: When a house is purchased, the contract is signed first and the closing is expected weeks later.At the closing, the buyer pays the seller for the house and the buyer takes possession.Explain how this transaction is like a futures or forward transaction.