1.Suppose you short a $42 Put with a premium of $3 and bought a $38 Put with a premium of $1.What is this strategy called?Ignoring time value of money and transaction costs, calculate max. profit, max. loss and break-even price.

2.In what situations would an investor want to have a synthetic long position in a stock rather than buying the stock outright? Give a detailed explanation with an example and discuss the pros and cons of these two strategies.