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  3. -7. (calculating put option payouts) draw a profit

-7. (Calculating put option payouts) Draw a profit or loss graph (similar to Figure 20.7)...

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Accounting

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-7. (Calculating put option payouts) Draw a profit or loss graph (similar to Figure 20.7) for a put contract with an exercise price of $45 for which a $5 premium is paid. You may assume that the option is being evaluated on its expiration date. Identify the break-even price of the underlying stock. What is the maximum loss the holder of the option might experience, and what is the maximum gain? Expiration Date Profit or Loss on Holding a Put Option Suppose yo purchase a put option on Ford Motor Compery . Ff stock with an exercise price of 520 tor a premsum of 53 . As iong as the expiration date price of Fords shares temains above the S20 exprcise price. the put is worthless of "out of the money. "If the price af Fords shares fals below $20 per grare on the expiatoon iate, then you will recetve S1 for every dollar the plice fatis betow \$200, and once the price falls bekich \$17, you will make at profit

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