q44 The butterfly has a negative cost, it brings in cash, which should not hold in the market
the bull spread with calls we are buying starts paying sooner than the bull spread with calls we are selling, it thus should cost more and we should have to pay a cash at the start
Under the given prices you can buy a bull with calls that starts paying at 1100 and stops at 1125 for a cost of 15.35
You can buy a bull with calls that starts paying at 1125 and stops as 1150 for 15.8
no one would pay more for a bull spread that starts paying at a higher price than one that starts paying at a lower price esp that the max gain of both is the same =25
also the question sais using exhibit 1 and does not specify to use calls, you could purchase a high put, sell 2 puts at a lower price, the purchase a put at an even lower price, and that would be a butterfly spread
q43 the say a covered call does not reduce exposure, page 407 in CFAI said they do.