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1.8. Suppose you own 5.000 shares that are worth $25 each. How can put options be used to provide you with insurance against a decline

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1.8. Suppose you own 5.000 shares that are worth $25 each. How can put options be used to provide you with insurance against a decline in the value of your holding over the next four months? 1.11. A cattle farmer expects to have 120.000 pounds of live cattle to sell in three months. The live-cattle futures contract on the Chicago Mercantile Exchange is for the delivery of 40.000 pounds of cattle. How can the farmer use the contract for hedging? From the farmer's viewpoint, what are the pros and cons of hedging? 1.13. Suppose that a March call option on a stock with a strike price of $50 costs $2.50 and is held until March. Under what circumstances will the holder of the option make a gain? Under what circumstances will the option be exercised? Draw a diagram showing how the profit on a long position in the option depends on the stock price at the maturity of the option. 1.16. An investor writes a December put option with a strike price of $30. The price of the option is $4. Under what circumstances does the investor make a gain

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