Suppose a call on a stock with strike price x 1 cost 1 and, Ask an Expert

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Suppose a call on a stock with strike price X +1 cost $1 and a put on a stock with strike price X −1 and the same expiration date costs $1. Suppose the price of the stock on expiration date is given by ST. Find the payoff to the investor that holds both the call and the put described above as a function of ST, first ignoring for premia and then taking premia into account. Draw the payoffs you found on a graph with ST on the horizontal axis.(piece-wise function)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91384496

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