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Course and Year: 80 Lesson Activity 2 Directions: Solve the following. (40 points each item) 1. Suppose a financial manager buys call options on 50,000 barrels of oil with an exercise price of $40 per barrel. She simultaneously sells a put option on 50,000 barrels of oil with the same exercise price. Consider her gains and losses if oil prices are $35, $37, $40, $43, and $45. What do you notice about the payoff profiles? 2. Jaffar Enterprises has a beta of 1.45. The risk-free rate is 8 per cent and the expected return on the market portfolio is 10 per cent. What is the stock's required rate of return according to the CAPM