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At what share price would Judy breakeven

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Question - Judy buys 1,000 shares of Royal Bank at $105 and immediately buys 10 puts with a strike price of $98 at a cost of $3.00.

a) Explain why Judy would buy this option.

b) Is there any time value in this option? If so, what is it?

c) What is Judy's total return if Royal shares hits $130.

d) What is Judy's total return if Royal shares hit $90.

e) At what share price would Judy breakeven.

Reference no: EM132804288

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