PRIN.OF CORP.FINANCE-CONNECT ACCESS
PRIN.OF CORP.FINANCE-CONNECT ACCESS
13th Edition
ISBN: 2810023360757
Author: BREALEY
Publisher: MCG
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Chapter 20, Problem 8PS

Option combinations* Suppose you buy a one-year European call option on Wombat stock with an exercise price of $100 and sell a one-year European put option with the same exercise price. The current stock price is $100, and the interest rate is 10%.

  1. a. Draw a position diagram showing the payoffs from your investments.
  2. b. How much will the combined position cost you? Explain.
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PRIN.OF CORP.FINANCE-CONNECT ACCESS

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