Option Payoff: Boeing Aerospace currently has a stock price of 167.50. The 1-month options listed below are trading in the market. The term structure of interest rates is at, with the current 1-year Spot Rate equal to 1.25% (APR with semi-annual compounding).

Call	Strike	Put
9.45	160	1.78
7.41	165	4.36
3.38	170	5.92

a) Are there any arbitrage trading opportunities? If so, identify the trading strategy and profits.

b) You have a bearish outlook for Boeing. Using put options and the given prices, which Bear Spread has the: (i) highest maximum payo; (ii) highest potential rate of return;

(c) Describe the risks of each Bear Spread if the price of Boeing does not change over the next month (i.e. if ST = 167.5).