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3.15 Compute profit diagrams for the following ratio spreads: a. Buy 950 -strike call, sell two 1050 -strike calls. b. Buy two 950 -strike calls,

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3.15 Compute profit diagrams for the following ratio spreads: a. Buy 950 -strike call, sell two 1050 -strike calls. b. Buy two 950 -strike calls, sell three 1050 -strike calls. c. Consider buying n 950-strike calls and selling m 1050-strike calls so that the premium of the position is zero. Considering your analysis in (a) and (b), what can you say about n/m ? What exact ratio gives you a zero premium? For the following problems assume the effective 6-month interest rate is 2%, the S\&R 6 month forward price is $1020, and use these premiums for S\&R options with 6 months to expiration

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