The current price of a stock is 54. Gary makes the following transactions: * Purchase one 50-strike European call option with a premium of 9.52. * Write two 55-strike European call options with a premium of 6.96. * Purchase three 60-strike European call options with a premium of 4.99. * Write three 65-strike European call options with a premium of 3.51. *Purchase one 70-strike European call option with a premium of 2.43 All options above have the same underlying stock and have 1 year until expiration. The continuously compounded risk-free interest rate is 4%. Calculate the maximum profit that Gary can obtain from this strategy. O 7.43 O 10.00 O 2.43 O 12.57 O 2.57

The current price of a stock is 54. Gary makes the following transactions: * Purchase one 50-strike European call option with a premium of 9.52. * Write two 55-strike European call options with a premium of 6.96. * Purchase three 60-strike European call options with a premium of 4.99. * Write three 65-strike European call options with a premium of 3.51. *Purchase one 70-strike European call option with a premium of 2.43 All options above have the same underlying stock and have 1 year until expiration. The continuously compounded risk-free interest rate is 4%. Calculate the maximum profit that Gary can obtain from this strategy. O 7.43 O 10.00 O 2.43 O 12.57 O 2.57

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

Problem 1PS

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