Determine your profit as of the expiration date of option

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Reference no: EM131972650

You short an asset with a price of $50. Simultaneously, you write a 6–month put, with an exercise price of $50, for $3.25. The effective annual interest rate is 6%. Determine your profit as of the expiration date of the option, when the underlying asset price on that date is $48 (assume that interest is credited on the short sale proceeds).

Reference no: EM131972650

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