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Suppose that a European put option to sell a share for $ 6 0 costs $ 8 and is held until maturity. Under what circumstances
Suppose that a European put option to sell a share for $ costs $ and is held until maturity. Under what circumstances will the seller of the option the party with the short position make a profit? Under what circumstances will the option be exercised? Draw a diagram illustrating how the profit from a short position in the option depends on the stock price at maturity of the option.
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