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The price of a strike of a stock is $40/share. The price of a one-year European stock with price of $30 quoted as $7/share put option on the on the shorts with a strike price and the price of European call option call $50 is quoted as $5/share. Suppose that an investor buys 100 shares, shorts I call option, and buys I put option. As a reminder, each option corresponds to 100 shares, Draw a diagram illustrating how the investor's profit or loss varies with the stock price over the next year.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92328283

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