Given the following information Price of a stock 101

Given the following information,Price of a stock ....... $101Strike price of a six-month call .......
$100Market price of the call ....... $5Strike price of a six-month put ....... $100Market price of the
put ....... $4Answer the following sentences.a) Which option is “in” the money?b) What is the
time premium paid for the put?c) If an investor establishes a naked call position, what amount is
received?d) What is the most the buyer of the call can lose?e) What is the maximum amount a
short seller (of the stock) can lose? At the expiration of the options (i.e., after six months have
elapsed), the price of the stock is $93.f) What is the profit (loss) from buying the stock?g) What
is the profit (loss) from buying the call?h) What is the profit (loss) from writing the call covered?i)
What is the profit (loss) from selling the put?j) At expiration, what time premium is paid for the
call?View Solution:
Given the following information Price of a stock 101
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