1. Northeastern Bank has issued 5-year zero coupon bonds that has an unusual feature. The face value of the bonds at maturity depends on the price of the companys stock price (S_T) at maturity. The specific formula is:

Share price at maturity of bonds in five years (ST)	Payment to Bond holders at Maturity (T = 5)
ST < 40.0	ST
40.0 ST 45.0	40.0
45.0 < ST	40.0 + (ST 45.0)

Assume that the stock price S₀ (at the time the bonds are issued) is $40.0. The Call and Put option prices for their respective strikes are given below.

Exercise Price	Price of Call	Price of Put
40.0	20	10
45.0	18	14

1. Draw a graph (not necessarily to scale) showing the payoff to the bondholders at maturity (Y-Axis) with S_t on the X-Axis. Clearly mark important values on the axes.
2. Find the Price of each bond issued by Northeastern Bank (The above graph should help you). Show or Upload a file with your work.