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At an annual continuously compounded interest rate of 5%, the 1-year $10-strike put premium for a stock is $1.0214. An investor shorts a 1-year $10-strike
At an annual continuously compounded interest rate of 5%, the 1-year $10-strike put premium for a stock is $1.0214. An investor shorts a 1-year $10-strike straddle on the stock. Calculate the investors maximum profit in 1 year.
Group of answer choices
-1.25
10
0
Cannot be determined based on the given information
1.25
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