Mixing options and securities can often create interesting payoffs. For each ofthe following combinations, show what the payo be when the option expires if(i] the stock price is below the exercise price and (ii) the stock price is above the exercise price. A that each option has the same exercise price and expiration date. Consider options with an exercise price of $100. Call the stock price at the expiration date 3. Note that your answer may be a r or may be a relationship to S, such as S+10. Required: a. Buy a call and invest the present value of the exercise price in a bank deposit. b. Buy a share and a put option on the share. c. Buy a share, buy a put option on the share, and sell a call option on the share. d. Buy a call option and a put option on the share. Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Buy a call and invest the present value of the exercise price in a bank deposit. Value of Asset at Option Expiration Buy a call Invest PV (100) Total 100 Required B > S Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Buy a share and a put option on the share. Value of Asset at Option Expiration Buy a share Buy a put Total 100 5 1005 5-101] Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Buy a share, buy a put option on the share, and sell a call option on the share. Value of Asset at Option Expiration Buy a share Buy a put Sell a call Total 5 Required B Required D > Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Buy a call option and a put option on the share. Value of Asset at Option Expiration Buy a call Buy a put Total 0 . |