Question: For problem 1 to 7, we assume the effective 1 year interest rate is 4% and the 835R 5-month forward price $1020, and the use

For problem 1 to 7, we assume the effective 1 year interest rate is 4% and the 835R 5-month forward price $1020, and the use the following premiums, if necessary, for 386R options with 6 months to expiration: C(950) = 120405, (371000) = 93.809, C(1U2U) = 84.470, (371050) = 71.802 P(950) = 51.777, P(1000} = 74.201, P(1020) = 84.470, P(105U) = 101.214 where C(K) denotes by the call option premium with strike price K dollars and P(K} denotes by the put option premium with strike price K dollars. 1. Suppose that you buy the 535R index for $1000, buy a IUUU-strike put, and borrow $980.39. Graph the result payoff and prot diagrams for the combined position

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