Question
Which of the following statements is true? You create a butterfly spread with strike prices $40, $45, and $50. The prices of call options with
Which of the following statements is true? You create a butterfly spread with strike prices $40, $45, and $50. The prices of call options with the above strike prices are $1.10, $0.80, and $0.70, respectively. When the stock price is $47, the profit from this strategy is $3.20. You own a stock and create an equity collar with strike prices $50 and $60. The call and put prices are $1 and $2 respectively. When the stock price is $64, the net payoff is $60 (i.e. the gross payoff plus adjustment for the option premium paid and received).
Select one:
a. i only
b. ii only
c. i and ii are both true
d. i and ii are both false
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