Maria just bought 2contracts of put options and, at the same time, 1 contract of call optionon the Swiss francs (SF) in the Philadelphia Stock Exchange at the strike price of 55cents per franc. Each option contract is for SF 10,000. The option will expire in three months. The put premium is 2.00 cents per SF and the call premium is 2.50cents per SF.

(1) Diagram the ‘combined’ dollar profit schedule against the future spot exchange rate. 

(2) Compute and show the breakeven future spot exchange rates on the diagram. 

(3) What are the maximum possible loss and maximum possible profit in dollar terms?