15. Compute profit diagrams for the following ratio spreads: a. Buy 950-strike call, sell two 1050-strike calls.

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15. Compute profit diagrams for the following ratio spreads:

a. Buy 950-strike call, sell two 1050-strike calls.

b. Buy two 950-strike calls, sell three 1050-strike calls.

c. Consider buying n 950-strike calls and selling m 1050-strike calls so that the premium of the position is zero. Considering your analysis in

(a) and (b), what can you say about n/m? What exact ratio gives you a zero premium?

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Derivatives Markets Pearson New International Edition

ISBN: 978-1292021256

3rd Edition

Authors: Robert L. Mcdonald

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Question Posted: Jul 24, 2024 10:04 AM

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15. Compute profit diagrams for the following ratio spreads: a. Buy 950-strike call, sell two 1050-strike calls.

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Derivatives Markets Pearson New International Edition

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