(Answered) Assume the effective 6-month interest rate is 2 and the

Finance

Assume the effective 6-month interest rate is 2% and the S&R 6-month forward price is $1020 The premiums for S&R options with 6 months to expiration are as follows: Strike call put $950 $120.405 $51.777 1000 93.809 74.201 Construct payff and profit diagrams for the purchase of a 950-strike S&R call and sale of a 1000-strike S&R call( call spread.) Verify that you obtain exactly same profit diagram for the purchase of a 950-strike S & R put and sale of a 1000-strike S&R put( put spread). What is the difference in the payoff diagrams for the call and put spreads? Why is there a difference?

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