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Draw the profit diagrams for the following options on the expiration date. For each pair of options, draw their individual profit graphs on the same picture. Mark the strike prices and premia clearly on your pictures and you can ignore the future values for the premia.

1. a long c(X= 100, T) = $2 and a short c(X=120,T) = $1.

2. a long p(X = 80, T) = $3 and a short p(X = 100, T) = $4.

3. a short c (X = 80, T) = $3 and a long c( X = 100, T) = $2.

4. a short p(X = 80, T) = $3 and a short c(X=120,T) = $1.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92668121

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