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Amy owns 1 0 0 shares of ABC stock with a cost basis of $ 3 5 a share. The stock is currently trading at
Amy owns shares of ABC stock with a cost basis of $ a share. The stock is currently trading at $ a share. Amy believes the price of ABC stock will fall to $ a share in the near future but over the longer term of to years, increase in value to $ a share. Amy would like to benefit from the expected nearterm decline if it occurs. Therefore, Amy writes a covered call at a strike price of $ and a premium of $
a How will the covered call help Amy profit if the expected phice decline occurs?
b What is the bestcase scenario for?
c What is the maximum profit Amy can incur from the call itself ignoring the stock
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