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Suppose that at time 0, the share price of a stock is $20. A European call option on a share with strike price $23 expiring
Suppose that at time 0, the share price of a stock is $20. A European call option on a share with strike price $23 expiring at time 1 has a premium of $2.45. A European put option on a share with strike price $23 expiring at time 1 has a premium of $4.36. The annual effective risk free rate of interest is 5%, and the stock pays no dividends. (a) Create tables that show the payoff and profit for an off market forward with strike price $23 expiring at time 1 if Si = 13, 15, 17, 19, 21, 23, 25, 27, 29. (b) Draw the graph of the payoff and profit for this forward. Suppose that at time 0, the share price of a stock is $20. A European call option on a share with strike price $23 expiring at time 1 has a premium of $2.45. A European put option on a share with strike price $23 expiring at time 1 has a premium of $4.36. The annual effective risk free rate of interest is 5%, and the stock pays no dividends. (a) Create tables that show the payoff and profit for an off market forward with strike price $23 expiring at time 1 if Si = 13, 15, 17, 19, 21, 23, 25, 27, 29. (b) Draw the graph of the payoff and profit for this forward
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