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Draw the profit diagrams at maturity for the following portfolios consisting of options. Clearly label all the important points in the diagrams. a. Sell a

Draw the profit diagrams at maturity for the following portfolios consisting of options. Clearly label all the important points in the diagrams.

a. Sell a one-year European call option with a strike of $22 and buy a one-year European put option with a strike of $16. Both options are trading at $1.

b. Execute the transactions in part (a) but now also buy the underlying stock trading at $20.

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