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Today's stock price is $25. Your portfolio consists of the followings: 1. You short sell a stock without paying dividends. 2. You write a collar
Today's stock price is $25. Your portfolio consists of the followings: 1. You short sell a stock without paying dividends. 2. You write a collar on the same stock by using 20 -strike put and 30 -strike call option. 3. Premium for 30 -strike put option is $7.5 and Premium for 20 -strike put option is $2.8 4. All options are European options with 1 year duration. 5. The continuously compounded risk-free interest rate is 6%. 6. There is no transaction cost. 7. (Hint: Think a synthetic way to create your portfolio) At the end of 1 year, the maximum profit will be (Please use 4 decimal numbers) Today's stock price is $25. Your portfolio consists of the followings: 1. You short sell a stock without paying dividends. 2. You write a collar on the same stock by using 20 -strike put and 30 -strike call option. 3. Premium for 30 -strike put option is $7.5 and Premium for 20 -strike put option is $2.8 4. All options are European options with 1 year duration. 5. The continuously compounded risk-free interest rate is 6%. 6. There is no transaction cost. 7. (Hint: Think a synthetic way to create your portfolio) At the end of 1 year, the maximum profit will be (Please use 4 decimal numbers)
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