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This question group has 3 questions that all use the information below regarding a hedging scenario. You will record your answer to question B.1 in
This question group has 3 questions that all use the information below regarding a hedging scenario. You will record your answer to question B.1 in the space below. You will provide your answers to B.2. and B.3. on the subsequent two questions in Canvas. An investor is planning to purchase 10 hundred shares of Company ABC at the end of three months. The current share price is 101.25. To hedge, the investors enters into the following option positions listed below. The investor purchases 10 call contracts. Each contract covers one hundred shares, has a strike price of $109 and a premium of $1.35 The investor sells 10 put contracts. Each contract covers one hundred shares, has a strike price of $87 and a premium of $2.82. B.1. What is the investor's total cashflow associated with purchasing the shares and the option contracts if the price is 100.69 in three months? B.2. Discuss all possible outcomes to this scenario. Be specific with your explanation and reference or provide specific values. B.3. In one to two paragraphs, discuss the implications of the alternative strategy listed. This question group has 3 questions that all use the information below regarding a hedging scenario. You will record your answer to question B.1 in the space below. You will provide your answers to B.2. and B.3. on the subsequent two questions in Canvas. An investor is planning to purchase 10 hundred shares of Company ABC at the end of three months. The current share price is 101.25. To hedge, the investors enters into the following option positions listed below. The investor purchases 10 call contracts. Each contract covers one hundred shares, has a strike price of $109 and a premium of $1.35 The investor sells 10 put contracts. Each contract covers one hundred shares, has a strike price of $87 and a premium of $2.82. B.1. What is the investor's total cashflow associated with purchasing the shares and the option contracts if the price is 100.69 in three months? B.2. Discuss all possible outcomes to this scenario. Be specific with your explanation and reference or provide specific values. B.3. In one to two paragraphs, discuss the implications of the alternative strategy listed
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