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Marion currently has 200 shares of BHP that she acquired for R96 each. She plans to sell them in six months and wants to use
Marion currently has 200 shares of BHP that she acquired for R96 each. She plans to sell them in six months and wants to use derivatives to hedge the risk of a share price decline. She has decided to purchase put contracts matching the value of her shares after establishing that a six-month put option on a single share of BHP with an exercise price of R95 gets a premium of R7.50. Required: conduct the necessary calculations and fill-in the missing information. a. If in 6 months, the price of a BHP share is R94 then, Marion's payoff and profit would be Choose... respectively. b. If in 6 months, the price of a BHP share is R100 then, Marion's payoff and profit would be Choose... respectively
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