Question: Suppose that put option, Put 1 , has strike $30, and Put 2 has strike $35. Put 1 costs $3.68 and Put 2 costs $7.10.

  1. Suppose that put option, Put1, has strike $30, and Put2 has strike $35. Put1 costs $3.68 and Put2 costs $7.10. If you create a bull spread with a long position in Put1 and a short position in Put2, what is the profit/loss of the position if on the maturity date the share price is $45 (Assume your bull spread position involves long/short options that cover two underlying shares, not two option contracts). Calculate your answer exactly to two decimal places.

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