a. The most that we can lose is computed as shown below:
= Call premium + Put premium
= $ 7 + $ 8.5
= $ 15.5
b. Profit or loss if fincorp is selling for $ 88 is as follows:
= ( Selling price - strike price - call premium ) - put premium
= ( $ 88 - $ 80 - $ 7 ) - $ 8.50
= $ 7.50
c. Break even price are computed as follows:
Highest break even price will be as follows:
= Strike price + call premium + put premium
= $ 80 + $ 7 + $ 8.50
= $ 95.50
Lowest break even price will be as follows:
= Strike price - call premium - put premium
= $ 80 - $ 7 - $ 8.50
= $ 64.50
So the break even prices will be:
= $ 95.50 and $ 64.50
Feel free to ask in case of any query relating to this question
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