The common stock of Ben's Burger $($BB$)$ has been trading in a narrow price range for the past months and Ben is convinced that it is going to break far out of that range within the next $6$ months. Unfortunately, he does not know whether it will go up or down. The stock is currently trading at $26$$ per share and the price of a $6-$month call option at an exercise price of $26$$ is $3$$$.$

$($a$)$ Assume that the risk$-$free interest rate is $2\%$ per year. Using Put$-$Call$-$Parity, what must be the price of a $6-$months put option with strike $26$ on BB stock? $(2$ Points$)$

$($b$)$ What are two differences between Forwards and Futures. $(1$ Points$)$

$($c$)$ Why do investors have to pay for options a premium, but not for Forwards$/$Futures$?(2$ Points$)$

$($d$)$ Briefly explain what a Credit Default Swap $($CDS$)$ is$.$ How are CDS prices and default risks related? $(3$ Points$)$

$($e$)$ Below you see two different investment strategies. A protective put strategy $($Hedged Strategy$)$ which limits both the downside and the upside potential, and an unhedged strategy. In your opinion, which investment is smarter as a rational investor? $(3$ Points$)-...$

Hedged Strategy

$\_$Unhedged Strategy