An investor bought 200 shares of a stock at 20 per share to

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An investor bought 200 shares of a stock at $20 per share. To hedge his position, the investor also writes two 25 calls, expiring in 4 months, for a premium of $0.50 each.

a. What is his breakeven price?

b. Ignoring transaction costs, what is his profit or loss if the stock price at expiration is $18, $22 or $27?

c Draw the contingency graph

Reference no: EM13620895

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