Troder (06/03)

Good day tutor, I can fully understand the workings behind the calculation of minimum return from a collar hedge in part b(i). What I do not understand is the calculation of maximum interest that could be received in part b(ii). Extract from question: Strike price 95250 Calls- 0445 Puts- 0.085 95500 Calls- 0.280 Puts- 0.17 95750 Calls- 0.165 Puts- 0.305 LIBOR is currently 5% and the company can invest short-term at LIBOR minus 25 basis points. Answer: The maximum interest rate that is possible under the selected hedge is 4.75%, equivalent to the put option exercise price of 95250. Troder will not have exercised its option, but taken advantage of the rate being above 4.5%. Net return = 4.75 – 0.25 – 0.280 + 0.085 = 4.305%. My question is.............. Why cant we use the combination of 95250 (for put) and 95750 (call) instead? This combination would give us a net return of: 4.75 - 0.25 - 0.165 + 0.085 = 4.42%, wouldn't it? Thank you. :)