Draw a diagram showing variation of the investors profit

Reference no: EM131237162

An investor buys a European put on a share for $3. The stock price is $42 and the strike price is $40. Under what circumstances does the investor make a profit? Under what circumstances will the option be exercised?

Draw a diagram showing the variation of the investor's profit with the stock price at the maturity of the option.

Reference no: EM131237162

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