Solve step by step. And give full solution 1. An investor buys a European...
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Solve step by step. And give full solution
1. An investor buys a European put on a share of $4. The stock price is $45 and the strike price is $42. Fill the table and answer. (25 points) $30 $35 $40 $42 $45 $50 $55 Stock price (ST) in the market Option value (Pay off) Premium Profit a) Under what circumstances does the investor make a profit? b) Under what circumstances will the option be exercised? c) What is the maximum profit an investor can make if he/she buys this put option
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