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You own a put option on Microsoft Stock with a strike price of $10. You paid $1 for the put option. The option will expire

You own a put option on Microsoft Stock with a strike price of $10. You paid $1 for the put option. The option will expire in exactly six months time.

  1. (i) If the stock is trading at $8 in six months time, what will be the payoff of the put? (2 marks)
  2. (ii) If the stock is trading at $8 in six months time, what will be the profit or loss of the put? (2 marks)

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