Assume that you have shorted the put option in Problem 4. a. If the stock is trading

Question:

Assume that you have shorted the put option in Problem 4.

a. If the stock is trading at $2 in three months, what will you owe?

b. If the stock is trading at $21 in three months, what will you owe?

c. Draw a payoff diagram showing the amount you owe at expiration as a function of the stock price at expiration.

Data From Problem 4:

You own a put option on Ford stock with a strike price of $8. The option will expire in exactly six months.

Step by Step Answer:

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Fundamentals Of Corporate Finance

ISBN: 9781292437156

5th Global Edition

Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford

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Question Posted: Feb 21, 2024 10:00 AM

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Assume that you have shorted the put option in Problem 4. a. If the stock is trading

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Fundamentals Of Corporate Finance

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