Homework Answers
Answer :-
In a put options a holder of a put option has a right to sell the share at strike price in predetermined time. And the fair Value of put option can be calculated as Present value of strike price - Market Price
the value of value option is always Max(0 , PV of strike price - MV )
Means the value of put option always greater than equal to zero so we say it is always sells for positive prices
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(i) Find out the cost of the following payoff diagram:
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