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Suppose you believe that Ace Company's stock price is going to decline from its current level of $80.50 sometime during the next 5 months. For S4.10 you could buy a 5-month put option giving you the right to sell 1 share at a price of $83 per share. If you bought this option for $4.10 and Adelco's stock price actually dropped to $62, what would your pre-tax net profit be?

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Financial Management, Finance

Category:- Financial Management
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