10.00 points Both a call and a put currently are traded on stock XYZ; both have
ID: 2814083 • Letter: 1
Question
10.00 points Both a call and a put currently are traded on stock XYZ; both have strike prices of $58 and maturities of six months. a. What will be the profitloss to an investor who buys the call for $4.80 in the ollowing scenarios for stock prices in six months? (Loss amounts should be indicated by a minus sign. Round your answers to 2 decimal places.) Stock Price Profit/Loss per share a. $48 $ b 53 58 63 68 C. b. What will be the profit/loss in each scenario to an investor who buys the put for $6.80? (Loss amounts should be indicated by a minus sign. Round your answers to 2 decimal places.) Profi/Loss per share Stock Price a.$48 b. 53 58 d 63 68Explanation / Answer
1.
Stock Price Profit/Loss
48: max(48-58,0)-4.8=-4.8
53: max(53-58,0)-4.8=-4.8
58: max(58-58,0)-4.8=-4.8
63: max(63-58,0)-4.8=0.2
68: max(68-58,0)-4.8=5.2
2.
Stock Price Profit/Loss
48: max(58-48,0)-6.8=3.2
53: max(58-53,0)-6.8=-1.8
58: max(58-58,0)-6.8=-6.8
63: max(58-63,0)-6.8=-6.8
68: max(58-68,0)-6.8=-6.8
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