Question
In a protective put we know that to choose a lower exercise price E for the put will make the put's premium lower. a. Explain
In a "protective put" we know that to choose a lower exercise price E for the put will make the put's premium lower.
a.
Explain why the put premium will be lower if E is selected to be lower.
b.
Would it ever be possible for the "kink" in the protective put payoff line be at a point above zero?
Prove your answer.
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College Mathematics For Business Economics, Life Sciences, And Social Sciences
Authors: Raymond Barnett, Michael Ziegler, Karl Byleen, Christopher Stocker
14th Edition
0134674146, 978-0134674148
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