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3 years ago

Both a call and a put currently are traded on stock XYZ; both have strike prices of $45 and expirations of 6 months.

Business

1 answer:

pychu [463]3 years ago

6 0

Answer:

a. Profit to an investor who buys call for $4

a. $ -4

b. $ -4

c. $ -4

d. $ 1

e. $ 6

b. Profit to an investor who buys call for $6.5

a. $1.5

b. $6.5

c. $ -1.5

d. $ -3.5

e. $ -8.5

Explanation:

The call option is a derivative in which an investor buys an option to buy the asset at a certain price. The value of the call option is determined by maturity. The buyer of call option can buy an asset at a strike price before expiration date.

If the investor buys the call option for $4 then the $4 is an expense for the investor. The value of call will be -4 unless the stock price is above $50.

If the investor buys the call option for $6.5 then the $6.5 is an expense for the investor. The value of call will be -6.5 unless the stock price is below $50.

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Answer:

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3 years ago

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ohaa [14]

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3 years ago

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LenaWriter [7]

Answer:

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