A particular put is the option to sell stock at $40. It expires after three months and

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A particular put is the option to sell stock at $40. It expires after three months and currently sells for $2 when the price of the stock is $42.

a) If an investor buys this put, what will the profit be after three months if the price of the stock is $45? $40? $35?

b) What will the profit from selling this put be after three months if the price of the stock is $45? $40? $35?

c) Compare the answers to (a) and (b). What is the implication of the comparison?

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Investments An Introduction

ISBN: 978-0324561388

9th Edition

Authors: Herbert B Mayo

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Question Posted: Jun 26, 2012 06:58 AM

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A particular put is the option to sell stock at $40. It expires after three months and

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Investments An Introduction

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