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5) Suppose that put options on a stock with strike prices $30 and $35 cost $4 and $7, respectively. You create a bear spread,
5) Suppose that put options on a stock with strike prices $30 and $35 cost $4 and $7, respectively. You create a bear spread, which consist in selling the $30 put and buying the $35 put (18 points). a. Perform a "what if" analysis for this strategy (make a Table showing profit as a function of stock ending price) b. What is the most you could lose in this strategy? C. What is the most you could make in this strategy? Make a graph showing net profit versus stock price expiration (St) d. What is (are) the break-even stock price(s)? e.
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