8. Look again at Figure 20.13 . It appears that the investor in panel ( b ) can’t lose and the investor in panel ( a ) can’t win. Is that correct? Explain. ( Hint: Draw a profit diagram for each panel.)

9. What is a call option worth if ( a ) the stock price is zero? ( b ) the stock price is extremely highrelative to the exercise price?

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FIGURE 20.13 See Problem 2. Value of investment at maturity Value of investment at maturity 0 (a) Stock price 0 (b) Stock price