Assume you have shorted the put option in Problem 8. a. If the stock is trading at

Question:

Assume you have shorted the put option in Problem 8.

a. If the stock is trading at $2 in three months, what will you owe?

b. If the stock is trading at $21 in three months, what will you owe?

c. Draw a payoff diagram showing the amount you owe at expiration as a function of the stock price at expiration.

Problem 8

You own a put option on Ford stock with a strike price of $8. The option will expire in exactly six months’ time.

Step by Step Answer:

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Corporate Finance The Core

ISBN: 9781292158334

4th Global Edition

Authors: Jonathan Berk, Peter DeMarzo

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Question Posted: Feb 29, 2024 04:00 AM

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Assume you have shorted the put option in Problem 8. a. If the stock is trading at

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Corporate Finance The Core

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