Please show how to solve these problems on the attachment.

Please show your work. 1. Consider a stock (XYZ Corporation) currently trading at $50, with volatility of 65%. The continuously compounded interest rate is 3%. The stock does not pay dividends. a) Fill in the following table of data for 1 year options on XYZ (based on the Black-Scholes Model, representing options on 1 share of stock). Indicate what source you used for the data, so that I can double check if something looks funny: Contract Call Put Call Put Call Put Call Put Strike 45 45 50 50 55 55 60 60 Price Dengue fever is a tropical disease carried by Aedes mosquitoes. XYZ is developing an environmentally safe pesticide that kills Aedes mosquitoes. ABC Corporation is developing a drug to treat people who are infected with Dengue fever and will need to raise equity in one year to continue research and development. ABC management are nervous about the terms on which they will be able to raise equity, and in particular, how news about XYZ is going to affect those terms. b. How do you expect XYZ stock price movements to be correlated with ABC's business prospects? Explain why. c. Discuss ways ABC can hedge its risk using instruments tied to XYZ, given your assumption about how XYZ stock price movements are correlated with ABC's business prospects. Specifically, how can ABC hedge using an XYZ call? An XYZ put? An XYZ forward? XYZ stock? In each case, discuss how ABC would use that instrument ALONE---not in combination with other derivatives. d. The CEO of ABC has heard about spread positions and wants to use one. Would you recommend a bull spread or a bear spread on XYZ stock? e. Based on your recommendation in (c), construct a spread of that type using the options from (a). Graph the profit in 1 year as a function of the price of XYZ in one year. Be sure to label the maximum profit, the minimum profit, and the breakeven point(s). f. Does this strategy fully solve ABC's risk management problem? Explain why or why not