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Suppose today is December 1 5 , 2 0 1 0 . You decide to buy a 2 : 1 January Ratio Call Spread on

Suppose today is December 15,2010. You decide to buy a 2:1 January Ratio Call Spread on Google stock. Specifically, you buy one call on Google with strike $570 and premium $35.55, and you write two calls on Google with strike $600 and premium $19.All options are European and mature on January 15,2011.(a) What is the net premium that you collect/pay in December?(b) What are the cash flows of this strategy in January?

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