2. Bank A is offering three European put options that mature in 6 months. Assume that i=0%. Put 1: Strike price K=$95, put option price c=$3 Put 2: Strike price K=$100, put option price c=$5 Put 3: Strike price K=$106, put option price c=$8 a) (6 marks) Consider a portfolio consisting of long positions on one unit for each of Put 1 and Put 3, short position on two units of Put 2. Sketch 1 a graph for the profit of the portfolio. How would you name this portfolio? Discuss when one would be interested in constructing such a portfolio (4 marks) Under what situations would the above portfolio have zero payoff? Under what situations would the above portfolio have zero profit? 2. Bank A is offering three European put options that mature in 6 months. Assume that i=0%. Put 1: Strike price K=$95, put option price c=$3 Put 2: Strike price K=$100, put option price c=$5 Put 3: Strike price K=$106, put option price c=$8 a) (6 marks) Consider a portfolio consisting of long positions on one unit for each of Put 1 and Put 3, short position on two units of Put 2. Sketch 1 a graph for the profit of the portfolio. How would you name this portfolio? Discuss when one would be interested in constructing such a portfolio (4 marks) Under what situations would the above portfolio have zero payoff? Under what situations would the above portfolio have zero profit