Determine the value of the position at expiration and the

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Consider a bond selling for $98 per $100 face value. A call option selling for $8 has an exercise price of $105. Answer the following questions about a covered call.

A. Determine the value of the position at expiration and the profit under the following outcomes:

i. The price of the bond at expiration is $1 10.

ii. The price of the bond at expiration is $88.

B. Determine the following:

i. The maximum profit

ii. The maximum loss

C. Determine the breakeven bond price at expiration.

Reference no: EM13479997

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