Question: Do not use Excel Problem 60.12 Suppose the stock price is $40 and the effective annual interest rate is 8%. (a) Draw the payoff diagrams

Do not use Excel Problem 60.12 Suppose the stock price is

Do not use Excel

Problem 60.12 Suppose the stock price is $40 and the effective annual interest rate is 8%. (a) Draw the payoff diagrams on the same window for the options below. (b) Draw the profit diagrams on the same window for the options below. (i) 35 -strike call with a premium of $9.12. (ii) 40-strike call with a premium of $6.22. (iii) 45 -strike call with a premium of $4.08

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