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Draw the payoff and profit/loss diagrams for a Call and Put option with a strike 50. Assume the premium on the put is $2.50 and the premium on the call is $4.00. If at maturity the spot is $48.00, which option gets exercised (if any), an which is true? a. Put; Payoff $2.00 b. Call; Payoff $2.00 c. Put; Payoff -$.50

Draw the payoff and profit/loss diagrams for a Call and Put option with a strike 50. Assume the premium on the put is $2.50 and the premium on the call is $4.00. If at maturity the spot is $48.00, which option gets exercised (if any), an which is true? a. Put; Payoff $2.00 b. Call; Payoff $2.00 c. Put; Payoff -$.50

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Draw the payoff and profit/loss diagrams for a Call and Put option with a strike of 50. Assume the premium on the put is $2.50 and the premium on the call is $4.00. If at maturity the spot is $48.00, which option gets exercised (if any), and which is true? a. Put; Payoff $2.00 b. Call; Payoff $2.00 c. Put; Payoff -$.50 d. Call; Loss $2.00 e. None of the above
Transcribed Image Text:Draw the payoff and profit/loss diagrams for a Call and Put option with a strike of 50. Assume the premium on the put is $2.50 and the premium on the call is $4.00. If at maturity the spot is $48.00, which option gets exercised (if any), and which is true? a. Put; Payoff $2.00 b. Call; Payoff $2.00 c. Put; Payoff -$.50 d. Call; Loss $2.00 e. None of the above
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