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2. (1 point) Suppose that the prices of the WeeChat puts change to become Strike Price 40 45 50 55 60 Put Price 0.25 1.07
2. (1 point) Suppose that the prices of the WeeChat puts change to become Strike Price 40 45 50 55 60 Put Price 0.25 1.07 3.35 7.44 10.30 WeeChat common stock is still trading at $49 per share, the continuously compounded three- month interest rate is 0.05 or 5% per year, and WeeChat will not pay any dividends during the next three months. Is the price of one of the puts too high or too low relative to the prices of the others? If so, what trading strategy will allow you to profit from the mispricing? 2. (1 point) Suppose that the prices of the WeeChat puts change to become Strike Price 40 45 50 55 60 Put Price 0.25 1.07 3.35 7.44 10.30 WeeChat common stock is still trading at $49 per share, the continuously compounded three- month interest rate is 0.05 or 5% per year, and WeeChat will not pay any dividends during the next three months. Is the price of one of the puts too high or too low relative to the prices of the others? If so, what trading strategy will allow you to profit from the mispricing
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