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4. Diagram for Net Profit. Suppose that a stock price is $20 per share at current time. Consider a European call option which allows to

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4. Diagram for Net Profit. Suppose that a stock price is $20 per share at current time. Consider a European call option which allows to buy 100 shares of the stock at $21 per share at the end of three months and the premium (for 100 shares) of the option is $100.00. The risk-free interest rate is 12% per annum. (a) Draw a diagram (at the time of expiration) illustrating how the profit from a long position in the option depends on the stock price at maturity of the option. (b) Draw a diagram (at the time of purchase) illustrating how the profit from a short position in the option depends on the stock price at maturity of the option

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