Problem 3/ For risk management purposes, Waad decided to undertake a strategy consisting of buying a call that has a strike price of $68 and selling a call that has a strike price of 58. The initial stock price was $25, the call premiums were $2.5 and $8.75. a/ What is the amount of her initial investment?

b/ What is her gain/loss if the stock price in 2 months is $38?

c/ What is her gain/loss if the stock price in 2 months increased by 15 basis points? (Note: 100 basis points = 1% = 0.01$)

d/ Whats the breakeven price?