A1 You hold a short position in an asset with a price of $50 and write a 6-month put (exercise price = $50) for $4. Given that the effective annual interest rate is 5% (annually compounded), what is your profit if the price of underlying asset at expiration of the option is $48?

Intermediate Algebra
10th Edition
ISBN:9781285195728
Author:Jerome E. Kaufmann, Karen L. Schwitters
Publisher:Jerome E. Kaufmann, Karen L. Schwitters
Chapter2: Equations, Inequalities, And Problem Solving
Section2.S: Summary
Problem 8S: What interest rate would you need to get to double an investment of 200 in eight years?
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A1 You hold a short position in an asset with a price of $50 and write a 6-month put (exercise price = $50) for $4. Given that the effective annual interest rate is 5% (annually compounded), what is your profit if the price of underlying asset at expiration of the option is $48?
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