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6: We assume an index price of $900, a 10% effective 6-month interest rate, and premiums of $82.63 for the 1175- strike 6-month call and
6: We assume an index price of $900, a 10% effective 6-month interest rate, and premiums of $82.63 for the 1175- strike 6-month call and $55.04 for the 1175-strike 6-month put. Suppose that you buy the S&R index, buy a 1175-strike put, and borrow $966. (a) Compute the total payoff if the index price is $1075 at expiration. (b) Compute the total profit if the index price is $1025 at expiration (a): answer correct to 2 decimals answer correct to 2 decimals (b)
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