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An investor creates a protective put position by buying one share of a stock at $50 and buying a European put option on the stock
An investor creates a protective put position by buying one share of a stock at $50 and buying a European put option on the stock with strike price $45 at $1.25. What is his profit if he holds his position until maturity of the option and the stock price is $55 then?
a. $-6.25
b. $1.25
c. $3.75
d. $5.00
e. $8.75
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