1. The current price of one share of stock is 70.00. The stock pays no dividends. The risk-free rate is 3%. One year call and put options on the stock are available for various strike prices. Mr. Smith observes the following prices of the one year options:

Call with strike price K₁ = 6.50

Call with strike price K₂ = 2.00

Put with strike price K₁ = 1.03463

Put with strike price K₂ = 3.32775

Smith buys a call spread consisting of one long call with a strike price of K₁ and one short call with a strike price of K₂. (K₂ > K₁).

1. What is the maximum possible payoff of Smiths portfolio?

2. What is the minimum profit of Smiths portfolio?