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Category > Business & Finance Posted 15 Jul 2017 My Price 8.00

1. A call option on Futura Corporation

1. A call option on Futura Corporation stock currently trades for $4. The expiration date is February 18 of next year. The exercise price of the option is $45.

a. If this is an American option, on what dates can the option be exercised?

b. If this is a European option, on what dates can the option be exercised?

c. Suppose the current price of Futura Corporation stock is $35. Is this option worthless?

2. Mrs. Gerard sold 10 IBM put contracts and bought 5 IBM call contracts with the proceeds of the sales. Both options have the same exercise price of $80 and the same expiration date. Draw the payoff diagram of her zero-investment portfolio

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Status NEW Posted 15 Jul 2017 09:07 AM My Price 8.00

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