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Question 2 Investor A bought, at time 0, a European call option with strike 110 and realizes a payoff of 20 at T = 1
Question 2 Investor A bought, at time 0, a European call option with strike 110 and realizes a payoff of 20 at T = 1 year. The underlying asset is corn. Investor B bought, at time 0, a put option with strike 135 with the same maturity.
Whats Investor Bs payoff at T = 1 ?
Investor B pays 6 for this option at t = 0. The annual compound
interest rate is r = 0.02. Whats investor Bs profit (i.e. accumulated
cashflow) at the maturity ?
Investor C bought a call bull spread (i.e. purchase of a call option with
strike 90, sale of a call option with strike 100. What is the payoff of
Investor C at t = 1 ?
Investor D has a short forward position with strike 100. What is the
payoff of Investor D at t = 1? What is the profit of D at maturity?
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