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Struggling with a and b of practice test. Thanks in advance (: 2) Current share price of ABDC Corp is $50. Given her forecasts of

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image text in transcribedStruggling with a and b of practice test. Thanks in advance (:
2) Current share price of ABDC Corp is $50. Given her forecasts of the future share value, Misha bought two put options on ABDC with a strike price of $50 and sold two put options - one with strike price of $45, the other $55. Information on the options can be found in the table below: Option Type Exercise Price Premium Put 45 $1.84 Put 50 $3.96 Put 55 $6.99 All options are European options and have ABDC Corp as underlying; all options have identical maturities. In the table below, tabulate the profits of Misha's investment strategy (ST stands for the share price of ABDC at option maturity; the payoff and profit can be a function of ST). a) What is the maximum profit? What about maximum loss? (5 marks) ST 55 payoff profit All options are European options and have ABDC Corp as underlying; all options have identical maturities. In the table below, tabulate the profits of Misha's investment strategy (ST stands for the share price of ABDC at option maturity; the payoff and profit can be a function of ST). a) What is the maximum profit? What about maximum loss? (5 marks) ST 55 payoff profit b) What is Misha's expectation of the share price of ABDC Corp, given her investment strategy? (maximum 2 sentences) (1 mark)

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