Suppose that put options on a stock with strike prices $30 and $35 cost $4 and $7, respectively. They both have 6-month maturity.

(a) How can those two options be used to create a bear spread?

(b) What is the initial investment?

(c) Construct a table that shows the profits and payoffs for the bear spread when the stock price in 6 months is $28, $33 and $38, respectively. The table should look like this:

Stock Price	Payoff	Profit
$28
$33
$38