Question
You buy the stock at a price of $53 and at the same time you buy a put option with an exercise price of
You buy the stock at a price of $53 and at the same time you buy a put option with an exercise price of $50, paying a premium of $ 2. a. What is your total cost at the beginning? b. If the stock price falls to $40 and you exercise the put, what would be your final wealth in this example? And how much do you gain or lose? c. What is your maximum loss in dollars if the stock price falls to $30 in the market? d. What would final wealth be if the company goes bankrupt and thus you'd see the price of the stock being equal to zero in the stock market?
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Quantitative Analysis For Management
Authors: Barry Render, Ralph M. Stair, Michael E. Hanna
11th Edition
9780132997621, 132149117, 132997622, 978-0132149112
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