The following prices are available for call and put options on a stock priced at $50. The risk-free rate is 6 percent and the volatility is 0.35. The March options have 90 days remaining and the June options have 180 days remaining. The Black-Scholes model was used to obtain the prices. . Assume that each transaction consists of one contract (for 100 shares)

For questions 16 through 21, consider a bull money spread using the March 45/50 calls.

16. How much will the spread cost?a. $986b. $302c. $283d. $193

17.What is the maximum profit on the spread?a. $500b. $802c. $198d. $302

18.What is the maximum loss on the spread?a. $500b. $698c. $198d. $302

19.What is the profit if the stock price at expiration is $47?a. -$102b. $398c. -$302d. $500

20.What is the breakeven point?a. $48.02b. $41.98c. $55.66d. $50.00

21.Suppose you closed the spread 60 days later. What will be the profit if the stock price is still at $50?a. $41b. $198c. $302d. $102

\begin{tabular}{|c|c|c|c|c|} \hline & \multicolumn{2}{|c|}{ Calls } & \multicolumn{2}{c|}{ Puts } \\ \hline Strike & March & June & March & June \\ \hline 45 & 6.84 & 8.41 & 1.18 & 2.09 \\ \hline 50 & 3.82 & 5.58 & 3.08 & 4.13 \\ \hline 55 & 1.89 & 3.54 & 6.08 & 6.93 \\ \hline \end{tabular}