Question 1 Please use the following real-life data on November 11, 2022 for Pepsi options (Sources: cboe.com ; treasury.gov ; finance.yahoo.com) Pepsi stock price: $178 Expiration date of options: December 9, 2022 (i.e., 1 month from November 11th ) Exercise (or strike) price: $180 Call option value: $2.66 Put option value: $5.35 U.S. Treasury annual yield: 3.71% A. Calculate the "speculative premium" for Pepsi's call option. Show all work B. Calculate the "speculative premium" for Pepsi's put option. Show all work. Question 2 Suppose you currently own Pepsi stock. You wish to do a "covered call" on Pepsi stock to protect against adverse stock price fluctuations. You use the option data shown in Question 1. Sketch a profit graph for this covered call. Briefly discuss the advantages of a covered call over just holding Pepsi stock. No calculations necessary, just disruss. Question 3 Everything else being equal, option values increase as their times to expiration increase. Why is this not necessarily true for several futures contracts? Briefly discuss. Question 4 You are interested in speculating in live cattle futures. Suppose on November 20, 2022, you buy 15 contracts of live cattle at settle price $1.5570/lk (Source: cmegroup.com). Now further suppose that on November 21t, settle price is $1.60/lb. Calculate your total profit (or loss). (NOTE: contract size is listed in your textbook.) Question 5 Suppose you own a portfolio of "blue chip" common stocks. You wish to hedge your stock portfolio using financial futures contracts. A. Should you buy or write a futures contract to hedge? Briefly explain. B. Which financial futures contract below would probably be best to use? Briefly explain. - Dow Jones industrial Average futures - S\&P 500 futures