Repeat the three parts of Practice Problem 9 except that now the problem is to devise a

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Repeat the three parts of Practice Problem 9 except that now the problem is to devise a package of investments with the payoffs shown in Figure 23.9. This package of investments is known as a "butterfly."
a. What package of investments would provide you with this set of payoffs?
b. How much would the package have cost you in July 2010?
c. In what circumstances might it make sense to invest in this package? Incidentally, this package of investments is known as a "straddle" by option buffs.
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Fundamentals of Corporate Finance

ISBN: 978-0078034640

7th edition

Authors: Richard Brealey, Stewart Myers, Alan Marcus

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