Question: Part II: True and False 3. The proceeds from a protective put has an upper bound . Choice : Explanation: 4. The writer of a

Part II: True and False

3.The proceeds from a protective put has an upper bound.

Choice:

Explanation:

4.The writer of a put option expects the price of the underlying asset to decline.

Choice:

Explanation:

Part III: Numerical Questions

5. You construct the following option strategy based on a stock: buy a call option and write a put option. Both options have the same strike price of $15. What is the payoff structure of this option strategy? Plot the payoff structure against a range of the stock price.

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