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Followings are the strike prices and the relevant options prices for both put and call options. All options are of same maturity. Strike Price Option Price In $ Call Option Put Option 40 $3 $1.4 50 $2.5 $2 Suppose that an investor is interested to construct a bear spread using put option information above. If the market price of underlying at maturity is $35, complete the table below?

Followings are the strike prices and the relevant options prices for both put and call options. All options are of same maturity. Strike Price Option Price In $ Call Option Put Option 40 $3 $1.4 50 $2.5 $2 Suppose that an investor is interested to construct a bear spread using put option information above. If the market price of underlying at maturity is $35, complete the table below?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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QUESTION 20 Followings are the strike prices and the relevant options prices for both put and call options. All options are of same maturity. Strike Price Option Price In $ Call Option Put Option 40 $3 $1.4 50 $2.5 $2 Suppose that an investor is interested to construct a bear spread using put option information above. If the market price of underlying at maturity is $35, complete the table below? ST K f (premium, price, value) Option Position Net Pay off $35 $ 24 %$4 $35 $ Strategy cost %24 Strategy Pay off 2$4
Transcribed Image Text:QUESTION 20 Followings are the strike prices and the relevant options prices for both put and call options. All options are of same maturity. Strike Price Option Price In $ Call Option Put Option 40 $3 $1.4 50 $2.5 $2 Suppose that an investor is interested to construct a bear spread using put option information above. If the market price of underlying at maturity is $35, complete the table below? ST K f (premium, price, value) Option Position Net Pay off $35 $ 24 %$4 $35 $ Strategy cost %24 Strategy Pay off 2$4
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