Chapter $21$:A collar is established by buying a share of stock for $$64,$ buying a $6-$month put option

with exercise price $$58,$ and writing a $6-$month call option with exercise price $$70.$ On

the basis of the volatility of the stock, you calculate that for a strike price of $$58$ and

expiration of $6$ months, $N(d_1)=0\mathrm{.}7116,$ whereas for the exercise price of $$70,N(d_1)=$

$0\mathrm{.}6443.$

Required:

a$.$ What will be the gain or loss on the collar if the stock price increases by $$1?$

b$.$ What happens to the delta of the portfolio if the stock price becomes very large?

c$.$ What happens to the delta of the portfolio if the stock price becomes very small?

Complete this question by entering your answers in the tabs below.

Required A

Required B

What will be the gain or loss on the collar if the stock price increases by $$1?$

Note: Round your answer to $2$ decimal places.