3 question (10%). Required: Draw a profit or loss graph for the purchase of put contract...

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Answer 1

Answer #1

Profit of put option buyer is given by following equation:
Profit of put option = Max(X-S_T,0) -p
where S_T is stock price at maturity, X is exercise price and p is premium paid to buy the put option.

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Answer 2

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3 question (10%). Required: Draw a profit or loss graph for the purchase of put contract...

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