Suppose: S = 23, X₁ = 22.5, X₂ = 25, T₁ = .1370, T₂ = .2192, r₁ = .0415, r₂ = .0428

For each of the following conditions on option price:

• Show the boundary condition that has been violated;
• Initial positions: state the positions (label them carefully) you would take today to arbitrage, show the cash flow from each position taken, show the net cash flow from the positions taken;
• Cash flows at expiry: state the positions (label them carefully) you would take to unwind the arbitrage given asset prices, show the cash flow from each, show the net cash flow from unwinding the arbitrage positions.

1. C_e(S,T₁,X₁) = 0.5 and S_T1 = 21.25 also calculate payoff if S_T1 = 24
2. P_e(S,T₁,X₂) = 1.5 and S_T1 = 23.5 also calculate payoff if S_T1 = 26.25