3) A trader buy a European put option on share for 3 USD premium ....
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3) A trader buy a European put option on share for 3 USD premium . The stock price is 42 USD and the strike price is 40 USD. Under what circumstances does the trader make profit? Under what circumstances will the option be exercised? Draw a diagram showing the variation of the traders profit with a stock price at the maturity of the option. (10 points)
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