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The point of purchasing a European option is to limit the risk of a decrease in the per-share price of the stock. Suppose you purchased
The point of purchasing a European option is to limit the risk of a decrease in the per-share price of the stock. Suppose you purchased 390 shares of the stock at $31 per share and 130 six-month European put options with an exercise price of $26. Each put option costs $1. (a) Using data tables, construct a model that shows the value of the porttolio with options and without options for a share price in six monnths between $15 and $35 per share in increments of $1.00. (b) Discuss the value of the portfolio with and without the European put options
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