A put and a call have the following terms: Call: strike price $30 term three months price

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A put and a call have the following terms:

Call: strike price $30 term three months price $3 Put: strike price $30 term three months price $4 The price of the stock is currently $29. You sell the stock short. Illustrate how to use the call or the put to reduce your risk exposure.

a) What is the maximum possible profit on the position?

b) What is the maximum possible loss on the position?

c) What range of stock prices generates a profit?

d) What advantage does this position offer?

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Investments An Introduction

ISBN: 9781133936527

11th Edition

Authors: Herbert B Mayo

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Question Posted: Jul 23, 2024 04:01 AM

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A put and a call have the following terms: Call: strike price $30 term three months price

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Investments An Introduction

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