1. Smith Inc. stock currently trades for $100. Nine-month European put options on the stock carry a strike price and premium of $95 and $.50, respectively. The annual risk free rate is 2%. You want to create a portfolio that mirrors the payoff of writing a 9-month European call on Smith stock with an exercise price of $95. Which of the following steps must you do in order to achieve this payoff?

		Sell one put option and receive $50.
		Purchase 100 shares and pay $10,000.
		Short the present value of exercise price and receive $9358.56.
		None of the above.

2. What is the upfront cash inflow or outflow associated with the portfolio you need to establish a short call position on the stock?

		an outflow of $19,408.56
		an inflow of $19,408.56
		an outflow of $691.44
		an inflow of $691.44

3. Find your profit/loss from your portfolio if Smith stock trades for $90 at the end of nine months. Round intermediate steps to four decimals and your final answer to two decimals. Do not use currency symbols or words when entering your response.