Question: For each entry in Table 2.5, explain the circumstances in which the maximum gain or loss occurs. TABLE 2.5 Maximum possible profit and loss at

For each entry in Table 2.5, explain the circumstances in which the maximum gain or loss occurs.

TABLE 2.5 Maximum possible profit and loss at maturity for long and

TABLE 2.5 Maximum possible profit and loss at maturity for long and short forwards and purchased and written calls and puts. FV(premium) denotes the future value of the option premium. Position Maximum Loss Maximum Gain Long forward -Forward price Unlimited Short forward Unlimited Forward price Long call -FV(premium) Unlimited Short call Unlimited FV(premium) Long put -FV(premium) Strike price FV(premium) Short put FV (premium) Strike price FV(premium)

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