You have purchased a put option on Pfizer common stock. The option has an exercise price of

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You have purchased a put option on Pfizer common stock. The option has an exercise price of $27 and Pfizer’s stock currently trades at $29.

The option premium is $0.50 per contract. (LG 10-4)

a. What is your net profit on the option if Pfizer’s stock price does not change over the life of the option?

b. What is your net profit on the option if Pfizer’s stock price falls to

$23 and you exercise the option?

LO.1

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Financial Markets And Institutions

ISBN: 9781259919718

7th Edition

Authors: Anthony Saunders, Marcia Cornett

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Question Posted: Jul 25, 2024 08:02 AM

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You have purchased a put option on Pfizer common stock. The option has an exercise price of

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Financial Markets And Institutions

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