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Will rate if answered correctly! Thanks You have purchased one put option expiring in one year with a strike price of $30. The current price
Will rate if answered correctly! Thanks
You have purchased one put option expiring in one year with a strike price of $30. The current price of the underlying is $33, the continuously compounded interest rate is r = 0.05, and the premium for the put option is $2.25. (a.) (4 points) Draw the payoff and P&L diagrams for the put option at expiration. (b.) (4 points) What is the P&L on the option at expiration if the underlying is $17.50 at that time (i.e. Si 17.50)? (c.) (2 points) What price would the underlying have to be at expiration if the P&L is to be exactly zero? =Step by Step Solution
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