Answer to Question #63940 in Other Economics for zhr
a) Under what circumstances will the put option be exercised?
b) Under what circumstances the seller of the out option make a profit?
B) Ignoring the time value of money, the seller of the option will make a profit if the stock price at maturity is greater than $65.00. This is because the cost to the seller of the option is in these circumstances less than the price received for the option.
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