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2. An investor writes a European put option with a strike price of 1,500 cedis. The price of the option is 55 cedis. What does
2. An investor writes a European put option with a strike price of 1,500 cedis. The price of the option is 55 cedis. What does this investor expect to happen? Under what circumstances does the investor make a gain? What is the maximum payoff that she can expect? What is the minimum? A) Investor expects the price to fall. B) Investor makes a gain when market price is above 1445 cedis. It is in the interest of the buyer to buy when price is below 1500. C) Maximum payoff is the 55 which is the premium received D) The minimum payoff is zero because beyond this the writer gets negative payoff
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