QUESTION 1 Consider a long call option position with strike K=80 and expiry T. What is the payoff when the option is exercised at expiry T if the security price at expiry (S_T) is 100? what is the payoff if ST is 80? what is the payoff if ST is 120? QUESTION 2 "If you are a long put option with strike K=80 and with expiry T, the current stock price is $100. What is the option's intrinsic value? (assume 0 rates or dividends)" QUESTION 3 "If you want to replicate the forward contract with calls and puts at delivery price K=80 and expiry T, how will you do it? ""long"" or ""short"" a call and ""long" or "short"" a put to create a long forward. "long"" or "short" a call and ""long" or ""short"" a put to create a short forward position. " QUESTION 4 "Assume zero rates and no dividends, the forward price is $100. If the call and the put (at K=80 and same T) are quoted at $26 and $5, respectively. There is an arbitrage and you can lock in an arbitrage profit by ""buy"" or ""sell"" a call, "buy"" or ""sell"" a put, and "long"" or "short" the forward all at K=80 and the same expiry T. How much will be the arbitrage profit in US dollar? (in integers ) QUESTION 5 "Assume zero rates and no dividends, the forward price is $100. How to make an arbitrage trade if the call (at K=80) is quoted at $101? "buy" or ""sell"" the call at K=100 for and ""buy" or ""sell" the forward at K=0 for . This allows you to net dollar today with no future liability." QUESTION 6 "Assume zero rates and no dividends, the forward price is $100. How to make an arbitrage trade if the call (at K=80) is quoted at $19? Answer: "buy" or ""sell"" the call at K=80 for and ""buy"" or "sell"" the forward at K=80 for This allows you to net dollar today and with non-negative future payoffs."