National Consolidated Acme Co. (NCAC) stock could be one of five possible prices on January 15, 2017. The prices and the probability that the stock ends up at each price are given in the following table:

Probability	.2	.3	.1	.3	.1
Stock Price	40	45	50	55	60

For each of the following questions, be sure to show all of your work. Assume in each that markets are efficient.

What would be the premium of a January 45 NCAC call?

what is the current price of NCAC shares?

What would be the premium of a January 50 NCAC put?

Consider a long strangle constructed from options which have an expiration date of January 15, 2017. The following table displays the possible prices of Boeing stock on January 15, as well as the payoffs accruing to someone who holds a long strangle on Boeing stock:

Probability	0.2	0.3	0.2	0.2	0.1
Stock price	$80	$90	$100	$110	$120
Gain fromlong strangle	$15	$5	$0	$10	$20

A long strangle is created using two options. For each option in the strangle above, indicate whether it is a put or a call, whether it is bought or sold, and calculate what its strike price is. Explain your answer.

Why would someone buy a long strangle? Explain carefully.What will it cost an investor to buy a long strangle today?