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True/False (Please explain your answer) 1. An investor traded in the options markets of stock S to construct a portfolio with the following payout at

True/False (Please explain your answer)

1. An investor traded in the options markets of stock S to construct a portfolio with the following payout at maturity. Because the losses from this strategy are capped, and the benefits are potentially unbounded the investor must have paid a positive price for this portfolio. Current stock price is So = 20. Payout at T 20 10 0 10 20 30 40 50 ST -10 - 20

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