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The premium on a pound put option is $.03 per unit. The exercise price is $1.60. Assume zero transactions costs and that the buyer and
The premium on a pound put option is $.03 per unit. The exercise price is $1.60. Assume zero transactions costs and that the buyer and seller of the put option are speculators.
(1) Calculate break-even point on the put option for the seller.
(2) Calculate break-even point on the put option for the buyer.
Please show how answer is derived.
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