ABC Corp. mines copper, with xed costs of $0.60/lb and variable cost of $0.30/lb. The 1-year forward price of copper is $1.10/lb. The 1-year effective annual interest rate is 6.2%. One-year option prices for copper are shown in the table below.

Strike Call Put 0.9500 $0.0649 $0.0178 0.9750 0.0500 0.0265 1.0000 0.0376 0.0376 1.0250 0.0274 0.0509 1.0340 0.0243 0.0563 1.0500 0.0194 0.0665

In your answers, consider copper prices in 1 year of $0.70, $0.80, $0.90, $1.00, $1.10, and $1.20.

5. Using table, compute estimated prot in 1 year if ABC Corp. buys collars with the following strikes:

a. $0.95 for the put and $1.00 for the call

b.$0.975 for the put and $1.025 for the call

c. $1.05 for the put and $1.05 for the call