Question: 7. Consider a 40-65 1-year strangle strategy. You are given: (1) The stock currently sells for $50. (ii) In one year, the stock will either

7. Consider a 40-65 1-year strangle strategy. You are given: (1)

7. Consider a 40-65 1-year strangle strategy. You are given: (1) The stock currently sells for $50. (ii) In one year, the stock will either sell for $70 or $35. (iii) The effective annual risk-free interest rate is 10%. Calculate the price you row pay for the strangle. 7. Consider a 40-65 1-year strangle strategy. You are given: (1) The stock currently sells for $50. (ii) In one year, the stock will either sell for $70 or $35. (iii) The effective annual risk-free interest rate is 10%. Calculate the price you row pay for the strangle

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