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Question 3 Both a call and a put currently are traded on stock XYZ; both have strike prices of $50 and maturities of six months.

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Question 3 Both a call and a put currently are traded on stock XYZ; both have strike prices of $50 and maturities of six months. a) What will be the prot to an investor who buys the call for $4 in the following scenarios for stock prices in six months? 2'. $40; 22'. $45; m. $50 iv. $55; 1). $60. b) What will be the prot in each scenario to an investor who buys the put for $6? Question 4 You short sell 200 shares of ABC Corp. at a price of $50 a share. Ignoring transaction costs, what is your largest possible gain from this transaction? What is your largest possible loss? Question 5 You purchased 200 shares of XYZ common stock on margin at $50 per share. Assume the initial margin is 50% and the maintenance margin is 30%. You will get a margin call if the stock drops below what price? (Assume the stock pays no dividends; and ignore interest on the margin loan.)

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