C (15 MARKS) Attempt only one question from this section. Provide your answer in the answer booklet. l. Identify any high profile corporate bankruptcy attributable to derivative trading. i. Describe the events that created the problem. 7marks ii. Outline the lessons that can be learnt from the occurrence of such events. 8marks 2. An investor adopts a Bull spread strategy by buying a call with a low strike price (KL) and selling a call "ith a higher strike price (KH). If he buys a call with strike price $35 at $6 per share and sells a call vsrith strike price $45 at $4. If the stock price at contract maturity were as shovm in the table below from I to VI. a. Determine the payoff on the long call, short call and the bull spread strategy from I to VI. Present your solution in a table. Systematically show how you arrive at your answers. 7marks b. An investor buys a put option on 3000 GCB shares with a contract price of $5 per share at premium of $0.05 per share with a maturity period of six (6) months. The investor also sells a call option on the 3000 shares with the same strike price, maturity period and premium. I. What is the difference between the two positions taken by this investor? 3marks Il. What difference will it make if the investor instead entered into a futures contract to sell the 3000 shares at the above contract price? 3marks Ill. Explain the difference between the intrinsic and time values of the option premium. 2marks Discuss what is meant by interest rate swaps and how it may be used to manage interest rate risk.