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Q. The common stock of the C.A.L.L. Corporation has been trading in a narrow range around $50 per share for months also you believe it is going to stay in which range for t he next three months. The price of a three-month put option with an exercise price of $50 is $4. (a) If the risk- free interest rate is 10percent (%) per yr, Illustrate what must be the price of a t hree-month call option on C.A.L.L. stock with an exercise price of $50 if the option is at the money? (b) Illustrate what would be a simple options strategy using a put also a call to exploit your conviction about the stock prices future movement? Illustrate what is the most money you can make on this position? Elucidate how far can the stock price move in either direction before you lose money?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M9165746

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