Below is a list of put option premiums with different strike prices. The options mature 1...
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Below is a list of put option premiums with different strike prices. The options mature 1 year later. Find out the cost of the following payoff diagram: Payoff Fa 100 105 Answer Strike price S₁ 90 95 100 105 110 Premium 4.45 6.08 8.02 The current stock price is 100 and the stock does not pay dividends. The risk-free interest rate is 8% p.a., continuously compounded. The stock pays no dividend. *Leave 2 decimal places for ALL answers. 10.27 12.80 Below is a list of put option premiums with different strike prices. The options mature 1 year later. Find out the cost of the following payoff diagram: Payoff Fa 100 105 Answer Strike price S₁ 90 95 100 105 110 Premium 4.45 6.08 8.02 The current stock price is 100 and the stock does not pay dividends. The risk-free interest rate is 8% p.a., continuously compounded. The stock pays no dividend. *Leave 2 decimal places for ALL answers. 10.27 12.80
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The payoff diagram in your question depicts a strategy known as a bull spread using puts This strate... View the full answer
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