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Question III Bull Spread Using Calls (10 points) Suppose that call options on a stock with strike prices $40 and $45 cost $5 and $4,
Question III Bull Spread Using Calls (10 points) Suppose that call options on a stock with strike prices $40 and $45 cost $5 and $4, respectively. They both have 10-month maturity. (a) How can those two call options be used to create a bull spread? (b) What is the initial investment? (c) Construct a table showing how payoff and profit varies with Sr in 10 month, for the bull spread you created. The table should looks like this: 2 Payoff Profit Stock Price ST 45
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