An investor purchases a stock for $37.5 and buys aput for $1.40 with a strike price...

Question

Question

An investor purchases a stock for $37.5 and buys aput for $1.40 with a strike price of $35. Show the profit/losstable.

business finance

Answer 1

Answer #1

We see that the profit=St-37.5+MAX(35-St,0)-1.4:

If St<35 Profit=-3.9

If St>35: Profit=St-38.9

Answer 2

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